Estate Planning Strategies for Grandparents in Indiana

Grandparents often play a pivotal role in shaping the financial future and values of younger generations. Thoughtful estate planning provides grandparents with a meaningful opportunity to support their grandchildren while preserving family traditions and values. Whether your goal is to help fund education, offer long-term financial stability, or create a legacy of generosity, there are several estate planning tools available to help you achieve your goals. With that in mind, the Indianapolis attorneys at Frank & Kraft discuss estate planning strategies for grandparents in Indiana.

Why Include Grandchildren in Your Estate Plan?

Instead of simply leaving money behind, many grandparents want to make a lasting difference in the lives of their grandchildren. This might include paying for a grandchild’s college tuition, helping with a down payment on a home, or encouraging responsible money management. Others want to foster a spirit of giving by involving their family in charitable activities. Grandparents can use estate planning as a tool to pass down both assets and core values. To ensure that your intentions are fulfilled, it is essential to choose the right legal mechanisms. State and federal laws governing inheritance, taxes, and trusts can be complex, making it important to work with an experienced Indiana estate planning attorney to put an effective plan in place.

Creating and Using Trusts

One of the most effective estate planning strategies for grandparents is the creation of a trust. A trust allows you to designate assets for specific purposes and to control how and when those assets are distributed to your beneficiaries. For example, you can set conditions that restrict distributions until your grandchild reaches a certain age or completes a milestone such as college graduation. In some situations, it may make sense to establish a generation-skipping trust. This type of trust is designed to transfer wealth directly to your grandchildren, thereby bypassing your children. Doing so can potentially reduce estate taxes and preserve more of your legacy for future generations. In Indiana, as in most states, a properly structured trust also shields assets from creditors, lawsuits, and financial mismanagement by the beneficiary.

Utilizing 529 College Savings Plans

If your primary goal is to support your grandchildren’s education, you may wish to contribute to a 529 College Savings Plan. These tax-advantaged accounts are designed specifically for education-related expenses such as tuition, books, and room and board. Funds in a 529 plan grow tax-free, and qualified withdrawals are not subject to federal income tax. Indiana residents who contribute to the state’s Indiana529 Plan may also qualify for a state income tax credit. Additionally, grandparents can take advantage of a special rule that allows them to contribute five years’ worth of annual gift tax exclusions at once, significantly increasing the impact of their contribution while reducing the size of their taxable estate.

Annual Gifts to Grandchildren

Making annual gifts is a simple and effective strategy for transferring wealth during your lifetime. Federal tax law currently allows individuals to give up to $19,000 per person (as of 2025) each year without triggering gift taxes. Married couples can combine their exclusions, allowing for a total of $38,000 per recipient annually. These gifts can be made directly to your grandchildren or placed in savings accounts, custodial accounts, or trusts. Annual gifting not only benefits your loved ones now but can gradually reduce your taxable estate over time, providing long-term estate tax savings.

Encouraging Philanthropy through Charitable Planning

For grandparents who value charitable giving, integrating philanthropy into an estate plan is a powerful way to lead by example. One option is to create a charitable remainder trust (CRT), which allows you to donate assets to a charity while still generating income for yourself or your heirs. Once the income period ends, the remaining trust assets are distributed to the charity of your choice. Another option is to establish a donor-advised fund (DAF). With a DAF, you can make charitable contributions during your lifetime, receive immediate tax benefits, and recommend grants to nonprofit organizations over time. Including your grandchildren in this process can help instill a culture of giving and promote family unity around shared values.

Can We Help You with Estate Planning for Grandparents in Indiana?

For more information, please join us for an upcoming FREE seminar. If you need assistance with estate planning for grandparents in Indiana, contact an experienced Indianapolis estate planning attorney at Frank & Kraft by calling (317) 684-1100 to schedule an appointment.

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