RETIREMENT LIVING Partner Insights
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Making Gifts to Grandchildren any grandparents make gifts
electing to split gifts). Gifts that do not
(“UTMA”) account offer a simple and flexible
tax advantages for education savings.
to their grandchildren. Before
exceed the annual exclusion generally avoid
option. Although the beneficiary is the legal
Contributions grow tax-free, and qualified
making such gifts, several issues
gift and GST tax consequences. Gifts ex-
owner, the assets are held by a custodian
withdrawals for educational expenses are
deserve consideration, including: (i) the
ceeding the exclusion require the use of the
until the beneficiary reaches the applicable
generally exempt from federal and state
source of the gift (e.g., bank or brokerage ac-
donor’s lifetime exemption (or, if no exemp-
age (21 years in New York), at which time
income tax.
count, retirement account, etc.); (ii) potential
tion remains, may be subject to tax).
the beneficiary gains control of the account.
For grandparents seeking to maintain
The source of the gift also matters. If cash
While contributions to a UTMA account do
control and provide asset protection, a trust
transfer (“GST”) tax, and income tax; and
is being gifted, will it require the sale of ap-
not provide an income tax deduction, they
may provide a better alternative. A trust can
(iii) who will administer the gift. Proper
preciated securities or a distribution from a
qualify for the annual gift tax exclusion,
allow the grandparent to determine when
planning can help avoid unintended conse-
traditional IRA, potentially triggering capital
making them an effective way to transfer
and under what circumstances distributions
quences.
gains or income tax?
wealth while reducing the donor’s taxable
will be made. Depending on how it is struc-
estate.
tured, a trust may also provide additional
taxes, including gift tax, generation-skipping
The 2026 federal annual gift tax exclusion is $19,000 ($38,000 for a married couple
Besides making outright cash gifts, contributions to a Uniform Transfers to Minors Act
Another option is a 529 Plan, which offers
estate and GST tax planning opportunities. Besides cash and securities, some grandparents choose to make lifetime gifts of tangible personal property, such as jewelry or family heirlooms. Whether financially valuable or not, these types of gifts often allow grandparents to witness their grandchildren’s enjoyment firsthand. More complex gifting options include making contributions to a grandchild’s existing Roth IRA or Trump Account. However, the Roth IRA option depends entirely upon the grandchild’s earned income, whereas Trump accounts don’t have such limitation. Instead, grandparents can contribute thereto during a grandchild’s “growth period” (i.e., prior to the last day of the year before a grandchild’s 18th birthday). At 18 years of age, these accounts convert to traditional IRAs; therefore, with few exceptions, withdrawals made after attaining 18 years of age and prior to attaining 59½ years of age are subject to penalties and are taxed at the grandchild’s prevailing income tax bracket. The Internal Revenue Code also permits unlimited gifts for qualified educational and medical expenses, provided payments are made directly to the educational institution or medical provider. If you’re considering making gifts to your grandchildren, the Trusts and Estates Practice Group at Bleakley Platt & Schmidt would be pleased to discuss the available options with you.
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CHEF-PREPARED MEALS ON-SITE CARE CONTINUUM
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SCAN TO HEAR WHY RESIDENTS & THEIR FAMILIES LOVE BRIGHTVIEW.
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Independent Living | Gallery Independent Living | Assisted Living | Gallery Assisted Living | Memory Care
INDEPENDENT LIVING We offer all the comforts of a retirement community on a rental basis – with no entrance fees or long-term commitments – in your choice of townhomes, apartments, and studios.
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ASSISTED LIVING Our residents have everything at hand and every opportunity to live their own life, on their terms. These apartments come complete with the supports and services a resident may require. MEMORY CARE At Wartburg’s Berkemeier Living Center we are dedicated to providing exceptional care and support for individuals with memory issues, ensuring a life of comfort, dignity, and joy. ADULT DAY CARE Whether your family chooses the social model or finds that the additional healthcare support of our medical model better meets your needs, you will have peace of mind knowing your loved one is in a nurturing, caring environment they are sure to enjoy.
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REHABILITATION Our care focuses on maximizing the independence of every patient. Our dedicated staff has many years of experience and the put that experience to work for every patient every day. We create an intensive therapy regimen for each individual that is based on their needs and goals – focused on a speedy recovery.