As you probably know, college has become almost unaffordably expensive in recent years. In fact, according to CollegeCalc, the average yearly tuition for a four-year school in California is currently more than $14,000. You can ease the burden on your grandson or granddaughter by giving him some money.
While there are other ways to arrange for paying a grandchild’s tuition, it is possible to leave a lump sum of cash to him or her in your will. If your grandchild is a minor, you need to know how to do so legally and properly.
The Uniform Transfers to Minors Act
Except for Vermont and South Carolina, all states in the U.S. have adopted the Uniform Transfers to Minors Act. This law provides instructions for leaving assets to minor children. To comply with the law, you must name an adult who can hold the money for your grandchild until he or she reaches a designated age between 18 and 25. You also must use precise language in your will.
A custodian for your generous gift
When you use the UTMA to leave a generous gift to your grandchild, the adult you choose must be responsible. Indeed, he or she acts as a custodian who holds the funds for your child. As a result, the custodian can invest your gift, provided the investment is honest and prudent. The custodian also might be able to use the funds to benefit your grandchild.
Ultimately, once your grandchild reaches the age you designate, he or she can retrieve your gift from the UTMA trust account at the financial institution and do whatever he or she wants with it.