Gifting Money to Grandchildren

Question:  My wife and I would like to begin to make gifts to our grandchildren so that we can be sure that their tuition payments are covered. My son’s marriage is very volatile. We would like to be sure that any assets we gift to our grandchildren do not end up on our daughter-in-law’s hands. What do you suggest?


When you gift an asset to your grandchild it is your grandchild’s asset. If you put the gift in the grandchild’s name alone then until that grandchild attains the age of majority (age 18 or 21 depending on the state the grandchild lives in) his guardian will have the authority to invest, sell and spend that money. The guardian must use if for the child’s benefit but if the gift is in the grandchild’s name the use does not have to be specific to education.

 An alternative is to establish a U.T.M.A. account (Uniform Transfers to Minors Act) and name another family member as Custodian of that account. In all states even if the age of majority is 18 an UTMA account can be held by the Custodian until your grandchild attains age 21. If you transfer the asset to an UTMA account for your grandchild’s name and name yourself as the custodian there is a risk that the asset will be included in your taxable estate. If you name your son there is a risk that in a divorce the judge would consider those assets to be under his control and mandate their use for a specific purpose.

 Naming another family member (such as one of your other children) as Custodian may be an interesting alternative. The Custodian would have the right to spend the money for the grandchild as the Custodian deems advisable. If education is your goal and you intend to transfer more significant funds to your grandchild you may also consider establishing a 529 plan or an educational trust.

Patricia Annino is a nationally recognized authority on women and estate planning.  She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about.  For more visit:

Speak Your Mind