Gifting money to grandchildren
Many people want to make gifts of capital to their grandchildren, but before making any gifts it first may be advantageous to consider a number of factors to ensure that the monies are available when they are needed.
The first stage to consider is how much and when do you want to make the gift. If this is being made as part of an inheritance tax planning strategy, it is probably important to make the gift sooner rather than later. For others, the gift of promising financial assistance in the future if required (perhaps backed up by a change to your Will if necessary) may be a better way to support your family.
Whilst the act of gifting is usually tax free for the recipient of the gift (with the exception of substantial gifts of capital into some forms of trust), there may be tax implications to the donor that should be considered. This means that advice at an early stage may be prudent to at least be aware of the implications of any particular course of action.
If gifting for the young person’s future needs, consideration needs to be made as to when access to capital may be required and the size of the gift may have implications on how best the monies are held in the interim. Getting the most suitable investment for the term required is very important, particularly if the children are very young.
Deciding who is going to control the monies until they are needed has to be thought about; responsibility will probably lie with either the grandparent or parents to look after the monies if they are not needed immediately.