When Ron and Missy’s two oldest granddaughters got married, they could not have been more pleased. The two wedding days were to be among the happiest days in their life, and they wanted to do all they could to be a part of it. Ron and Missy very generously paid for both weddings.
Ron and Missy also have another, much younger, granddaughter. They want to pay for her wedding, too, but they are not sure that they will be around to see it since this granddaughter is only 13. How can Ron and Missy be sure that this granddaughter will be provided for in the way that their other grandkids were? The answer is conditional gifting.
What is Conditional Gifting?
Conditional gifting is a helpful tool that allows people like Ron and Missy to place certain conditions on the assets their loved ones receive in their will or living trust. This empowers them to take a more active role in their legacy. In conditional gifting, rather than your beneficiary simply receiving the gift when you pass on, they must meet a certain benchmark first. There are many reasons for choosing conditional gifting. For example, you might want to protect your assets and so you may require the beneficiary to reach a certain age before they receive the asset, ensuring that they will be mature enough to handle the responsibility. Or, as in the case of Ron and Missy, you may want to earmark the gift for a certain situation. Ron and Missy met with their estate planning attorney and drew up a clause in their living trust, gifting a certain amount of money to their third granddaughter, which she will receive upon getting engaged to be married.
Additional Considerations for Conditional Gifting
While conditional gifting can be a useful tool, it can create unforeseen difficulties if not carefully structured. Both the purpose of the gift and the administration of the giving need to be kept in mind. If you want to help pay for your granddaughter to get an education, must she pursue a degree in economics or engineering like you did? Must she attend the same university? Must she attend a four-year school? Would an associate or technical degree suffice?
Requirements that are too specific can serve to frustrate the purpose of the gift and also make it more difficult for your trustee to administer. The art of conditional gifting is striking a balance in the purpose of a gifting and the details of the conditions that allow it release.
Contact the Estate Planning Law Group of Georgia
At the Estate Planning Law Group of Georgia, we have many years of experience helping our clients navigate every aspect of their estate plan. If you have questions about conditional gifting or wills and living trusts in general, do not hesitate to give us a call at (770) 822-2723 or fill out the form below.
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