Martha, a 75-year-old widow, owns more than $8 million in assets. Martha’s son,

Question

Martha, a 75-year-old widow, owns more than $8 million in assets. Martha’s son, Jonathan, has two children, ages 10 and 13. Her daughter, Annie, also has two children, ages 9 and 13. Martha has decided that she wants to begin giving her assets to her grandchildren so she can minimize the size of her estate. She specifically wants to provide for her four grandchildren’s college education. What planning opportunities can you suggest so that Martha can provide for her grandchildren’s education while minimizing any transfer taxes?

Explanation / Answer

The following plan can be suggested for Martha:

Make give away in excess of $14000 per year to grandchildren if the gist is made directly to their college for her grand children's benefit.

She can also consider giving gift under the Uniform Gift to Minors Act (UGMA) or the Uniform Transfer to Minors Act (UTMA). Such a trust can provide for more flexibility for expenditures such as education.

She could pass on upto $5.25 Million at death free of estate tax.

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