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>> Good evening and welcome to PBS Fort Wayne.

I'm Sandy and our show is called LIFE Ahead for a Good Reason.

We have different topics each week but we focus on trying to give you education and information on topics that might be beneficial to you as you make some of the decisions in your LIFE Ahead.

And tonight is no exception.

We have an attorney with this evening and we're going to be talking about as a grandparent what can you be doing for your grandchildren perhaps financially or legally or how can we deal with some of those different issues?

And I think a lot of you probably have grandchildren or knows somebody that does.

So you might want to listen up and give us a call if you have any questions.

Our number is (969) 27 twenty .

But if you live out of the Fort Wayne area it's toll free for you if you just put a one 866 in front of it.

I want to introduce you to two of the star of our show this evening.

>> Troy Kiffer attorney is with us this evening.

And Troy, I'm sure excited to have you back.

You've been on this show before and you've chosen this topic for tonight.

>> Why I mean why are we talking about estate planning for grandchildren?

Yeah, well, thank you, Sandy .

It's very nice to be back here.

>> It's always such a joy to see you.

Thank you.

Well, my wife and I had a big change in our life just recently we became first time grandparents.

>> Oh, that's within the last three weeks.

Yes.

Oh, and in the last three weeks in the last oh I could give you lots of advice.

I'm way down the road.

>> It's pretty amazing isn't it?

We are finding that out very quickly.

What people say is it's the best thing in the world and it really oh it's amazing.

>> It's amazing and you'll you'll find that as this grandchild boy girl boy oh boy.

>> OK, yeah.

All right.

Excellent.

Well all right.

See we have somebody with expert experience here not only legally but as a grandparent and these things we're going to talk about tonight, Roy, are these things that have come to mind to you as you became a grandparent or do you have to deal with grandparental?

>> Is that a word grandparental?

It is now OK.

There is no grandparental issues in your your work as an attorney.

>> Does it cause problems?

Well, it provides opportunities, sure.

And it's something that as an attorney that works a lot in estate planning and elder law that I've dealt with with for many years helping clients plan ahead.

>> But a grandchild changes everything and Jonti absolutely puts everything in a new perspective.

So as I was looking at life and thinking about our new grandson and what we could do for him in our state plan.

Sure and moving forward these things really became a lot more relevant.

>> They were a lot more personal.

Right.

And you understood the importance of making some legal decisions or provisions or whatever you needed and wanted to do.

>> Let's talk about grandchildren receiving gifts from grandparents from their will.

>> Is that a common thing?

>> Do a lot of people in their work because you do planning as well do they put their grandchildren and wills?

They do on occasion.

It's not something that I would say is common but it certainly is something that happens typically what will happen in a will especially for most of my clients is that they will name children and then it's sort of expected that in naming children that increases their child net worth and then that will trickle down to grandchildren that'll be passed on to the grandchildren or be used to help the grandchildren in some way eventually.

>> Right.

What happens though if you don't put grandchildren directly as some sort of a beneficiary in your will?

>> Can they still receive anything from you?

Well, if you would like a grandchild to receive something through a will then you would definitely want to name them specifically because of a grandchild is not named in a will.

It's unlikely that the grandchild would receive anything directly from a grandparent.

>> The law says that if most of the time the way wills are written then if a child passes away that that child share if they're named in the will will go to the grandchild.

>> But that's you know, not real common and it's something they just take by representation.

>> Does that happen automatically or do you have to have that in writing somewhere in law?

>> It is not a law you would have to have that specifically that wording specifically in a will.

>> Oh and the Latin term as per stickups which I like that word say it again Proserpina first herpes per starbase and that means that means that if if I leave a gift to my child Yarshater herpes and that's the exact wording in the will that means if that child passes away before me then that gift will go to their children.

>> Got it to be split equally per herpes.

>> OK, there you go and try to find a way that you can work that into a social conversation tomorrow.

>> OK, let's talk about what special issues might arise when leaving gifts to grandchildren.

>> I mean are there concerns or issues that might develop?

>> Well, something that we have to be particularly careful of is that in most cases because of the age difference a grandchild is usually a minor under the age of twenty one or eighteen and if a child would receive a gift that is greater in ten thousand dollars than under Indiana law, there has to be a custodian placed in charge of that gift if they're under twenty one twenty one.

>> OK so you couldn't name a teenage grandchild in your will.

>> I mean they wouldn't be able to get anything or they have to yeah you'd have to have a custodian they would be the owner they would be the legal title holder to whatever you left them with the cash or usually personal property.

>> Yeah, maybe there's a family heirloom or you know you want your grandson to have that special fishing pole.

Yeah.

You know that's that's a little different.

But if it's something that the value is over ten thousand dollars, the law says that even though it's in the name of that child and they technically own it, someone probably should be put in charge of it to make sure that it's secure if that's if that happens if you do want to leave something to a grandchild and you know they're not yet twenty one and you you say OK, they're going to get let's say twelve thousand because that's over ten thousand and you need a custodian do you name that Canastota in in the will then you could yes and I would recommend that if OK that's something that they would want to do the kind of gift that they would want to make to a grandchild and it could be that child's parent.

>> OK, unfortunately we run into situations where maybe that parent is not the best person to be holding that money.

Yeah, for various reasons.

So you could at the grandparent could name someone else.

>> You know Troy, sometimes when we've been on this show and we've talked about estate planning and in wills and talking about, you know, dispersing our assets and maybe you you have a grandchild.

>> You have a grandchild.

I do.

I bet you want to leave things to but they're younger.

So would you say would you set it up in your will that like at eighteen they get so much money at twenty five they get so much or all at one time.

>> What's the norm?

That's something that we often see in wills for a couple of reasons if you're not sure how the child may manage money because they're they're so young that just hasn't been developed in them yet.

Yeah or even if they're a little bit older and you kind of know that OK, they're going to need a little help.

Yeah they're called sometimes they're called spendthrifts for for a reason.

Yeah.

>> And you want to all of a sudden they're like new cars and motorcycles and right.

Because they don't see the future yet and maybe don't really know how to handle a large amount of money right in sometimes unfortunately family members not only would it not be a blessing for them to receive a large amount of money, it may actually be harmful to them.

>> That's bad to that situations like that.

So in those cases you can we can assist in setting up a type of testamentary trust.

The will itself will actually create a trust OK for that person and you can designate stages in life in which they would receive distributions from that trust.

>> OK, and who is the trustee trustee who do you name that in the will in these documents as well?

>> Yes you would you would name somebody whom you trust OK. And once again it could be the the grandchild's parent it could be another child.

It could be an aunt or an uncle someone who's trusted and who you believe would do right and really listen to their needs.

Yeah.

And those trusts usually have language that say that in the event that that child needs money for education, a first home, a wedding, those big ticket items in life .

>> Yeah.

That the trustee is allowed to make decisions early so that child who's under twenty one then would go to that trustee whomever that might be and say hey this is you know I do need money for college or whatever.

>> Can I have that by November or something?

Is that how you work?

That's exactly how that would work and then that trustee normally would have the discretion then as to whether or not to make that distribution.

>> But the trust usually says yeah, go ahead and make that distribution for something like that.

>> But if they say I want another new car a second, I want a Lamborghini this time you can say no trustee could put the brakes on.

>> I get that.

OK, well we have some phone calls coming in already and I do want to remind you (969) 27 twenty is our phone number.

>> We do have in the phone bank back in the control room someone answering phones for us and they will listen to your question and if you want to talk to us live on the air that's great that way if Troy wants to ask you a question back here right there if you're not comfortable with that, the phone operator will take your question, type it up and put it on the teleprompter out here so I can ask you and that's what's happened in this case.

>> We have just had a home phone call from James and he says Is there a difference in leaving money for a grandchild versus leaving money to a family friend or non profit?

>> Hmm, interesting question.

That really is first of all, thank James for your question.

>> Do appreciate hearing from you from a technical standpoint there isn't a big difference between leaving money to a family friend or not for profit other than what we've talked about.

We want to make sure that if you're leaving money to a grandchild that they are old enough that they can manage those funds and that would mean, you know, having the ability to know that those moneys are fleeting and if the grandchild is not old enough that you're sure that they can handle it, then we would want to put someone in charge of that such as a trustee or a custodian of a a minor trust or a minor account.

>> I say OK. Well, James, thank you so much for watching us here this evening.

Great question.

And I'm sure if you had that question probably a lot of other people have as well.

>> So hopefully we've solved that for a lot of people with that advice.

OK, I have heard of something called UTM A I don't know what that is.

>> What is you TMNT that is the Uniform Transfers to Minors Act OK is that is that like national Act?

I mean every state abides by it.

Every state has their individual take on the OK so a uniform act usually means that some people have gotten together and come up with model language that they feel like is the best language in that subject and then each state can adopt it as is or adopt it with some changes.

And Indiana has adopted in this case the uniform transfer to minor act.

>> So OK, how would that apply to people that are watching this evening?

Grandparents hmm.

>> And that is the act in the law that says that if a minor receives something from a will or some other type of gift in excess of ten thousand dollars that someone whom we call a custodian would need to be placed in charge of those funds on behalf of the minor.

>> OK, and that's to keep unfortunately their circumstance is where even parents will justify spending those funds for maybe the entire families benefit or unfortunately for some other purposes and may be meaning and thinking oh, we'll put that money back in his fund before or or maybe maybe not right.

>> Which happens sometimes and in the idea is that the custodian is accountable to the child for those funds.

>> Is that monitored in any way ?

It depends on the situation and how they receive the funds there is not an official accounting to anyone but if any question arises it can definitely fall under the jurisdiction of a court and I've heard that that that sort of thing might happen from other people in the family and maybe they recognize oh let's see, I'm not quite sure they're spending the money the way they should be.

Could they bring that to an attorney or somebody?

>> Yes, absolutely.

OK, that's usually the way that it's it's brought to light.

OK, how about issues that might arise when you're leaving gifts to your grandchildren are there problems that can come up other than what we've we've talked about?

>> The big issue would be with minors and their ability to to manage those funds other than that they're treated just as James asked just like any other beneficiary or someone who would receive a gift.

>> OK, in some cases it could have tax consequences because the federal government would rather money be taxed at each generation so they would like money to be taxed when passes to children and then taxed when it passes to grandchildren.

I say so if a grandparent skips the parent and goes directly to the grandchild it does have the potential of generation or excuse me of creating generation skipping taxes because it skipped a generation and we met now it generation skipping taxes that's legal or not legal.

>> Well you you can make gifts and skips over that generation generation but it could create additional tax consequences.

>> Oh I see.

OK and it depends on the situation on each family situation right now it would only generate additional tax if it's above the federal gift and estate tax deduction.

>> I see which for an individual right now is over twelve million dollars not too many people or hold their hands up to that one.

I have some clients who fall into that category but it's it's a few most of my clients don't have to worry about that tax.

>> Yeah.

So gifts are given and skip a generation then generally does not cause problems.

OK with additional taxes but it's hard telling what Congress might do.

>> The idea the law as it currently stands Congress is going to reduce that exemption in the upcoming years so we'll just have to wait and see.

It could subject more people to that type of tax.

>> OK, but it's something that you should be aware of if you're considering gifting to grandchildren and I wouldn't have automatically thought about that generation skipping tax.

I wouldn't have known about that.

So worthy of finding out how much that might be OK, remember (969) 27 twenty is our number here and we would love for you to give us a call.

OK, let's talk about other your gifts in other ways to your grandchildren other than leaving it in a will how can you I mean your new grandson you know your heart is with him right now and if you wanted to to to set up something to give to him other than a will, how can you do that?

>> Well, another great gifting opportunity is a five twenty nine education savings account.

>> Yeah.

Yes.

And you could start that is a three week old baby.

Absolutely yes.

Right and it operates much like a Roth IRA where money goes into it after it's taxed but it grows tax free and it's spent for education purposes then it can be withdrawn tax free.

>> That's a real benefit.

No wonder people or I hear that a lot people are talking about setting up five twenty nine.

Is that what it is?

That's right.

Twenty ninth for their grandchildren.

>> Jack is on the phone with us right now.

Jack, thank you for watching and what is your question for tonight.

>> Tonight Jack I heard the Universal a Universal Transfer to Minors Act and the I would like to know the correlation of that with a guardianship account where a child's recovered money and a personal injury case and the amount was set up in the guardianship fund and they're being told that that those funds transfer immediately to the Guardian at the 18th birthday.

>> How does that reconcile with the universal Universal Transfer to Minors Act?

OK, that's a good question, Jack.

>> I'll leave that one to you, Troy.

Yeah, that is a good question, Jack.

And I appreciate the call and I think it depends and without getting too much into the specific situation, I think I would need just a little more information on how those two are are set up.

I think probably if there is a court ordered guardianship and there has been an order to transfer those funds to the guardianship at age 18, then that that's what needs to be done in most cases we don't necessarily have guardianships and in those cases if if the child has no other supervision or appointment looking out for them, then it would be transferred to that child individually by law at age twenty one.

>> But I would certainly think that if there's a court order and the guardianship is in place and and there is a direction to transfer at age 18 then that that makes sense that it would transfer that way.

>> OK. All right.

Thanks for watching us here tonight and I'm sure you've given a lot of other viewers some food for thought on that topic as well.

OK, we're going to talk about Trus for a little while and we've talked about that before with your coworkers in terms of planning and of course naming a power of attorney and a personal health care representative and getting all of those things done advance of the importance of that even as young people.

>> OK, so you're you're is that your son or daughter that had our eldest daughter and her husband OK. >> All right.

So now as new parents they're probably overwhelmed as well with that feeling of responsibility to this little baby and want to make sure that they have plans made in case anything should ever happen to them because you just never know.

>> Oh, and so trusts are one way to set things up for that child.

>> Talk about trust, different kinds of trust right?

>> That's exactly right.

And we talked about one type of trust that's created by a will and there could be other trusts that are created immediately in which funds could be placed in that trust for the benefit of the child whether that those funds would be used down the road or whether the child has special needs.

That's where we see a special needs trust extremely important .

Absolutely.

So if a grandparent instead of leaving assets directly to a child with special needs even when that grandchild becomes an adult we would want to put that into a third party special needs trust so it doesn't affect their potential benefits that they make.

>> Right.

And that's a mistake I think a lot of people make.

They think well I'll just leave that special needs child X amount of money but not realizing that may make them not eligible for Medicaid or other grants or scholarships or other funding that might be available to them now.

So if they put up and set it up in a trust it won't compete with that.

>> That's exactly right.

And and I understand that thinking that OK, well we'll give all this money and and they will benefit from that but they don't really benefit from it if their government benefits stop until all that money is exactly.

>> So we're just losing it.

Right.

So it's nice to have that set off to the side to pay for special things that perhaps the government benefits would not pay for .

Yeah.

And and they would get the most benefit from that.

>> How about naming your grandchild as a beneficiary perhaps on a an investment that you might have an IRA or something or savings account where is that a typical thing and what about life insurance policies?

>> Could you name a grandchild as the beneficiary?

Those those are all gifting tools that we use, OK?

And very often we call those non probate transfers because they transfer without going through the will and we very often will use those things.

But once again the same restrictions and the age of the grandchild apply.

So if you have an adult grandchild it's a perfect planning tool to use for for that grandchild and we do see that often where an estate will be split and they'll say well I have this insurance policy off to the side.

>> That's what we'll give to the grandchildren we only have about a minute left in the show and I want to thank you all for watching this evening and thank you, Troy Kiffer for being with us and sharing all of your expert legal advice.

But in these last few seconds, Troy, what would you tell our audience that they need to keep in mind most?

>> Yeah, well thank you once again, Sandy , for for inviting our program.

It is always nice.

My final thought would be it's something that if you want to leave any gift to a grandchild it's good to talk to your attorney and your financial advisor to educate yourself on what the best way to do that would be because there are there are catches and there are pitfalls and yeah.

And things that have to be addressed and it can be done but you just have to make sure that you have good advisors who can walk you through that process and if you don't you may end up spending more money trying to figure it all out later if you don't do it correctly at the beginning.

But once again we want to thank all of you for watching and of course we'll be back every Wednesday night at seven thirty with a new show and a new topic in this show will air three more times tomorrow night I believe it's at eight o'clock and two times this weekend.

You can check your local listings for I and you might advise somebody to check in and see what Roy had to say.

>> Good night