One of the more popular ways that I see grandparents participating in their grandchildren’s future is helping to provide for college. When this is the case, a 529 college-savings plan is often the wise choice. These plans offer distinct tax advantages and help to pay for the future higher education expenses for the grandchild. While the details of these plans vary by state (some states offer savings plans, some offer prepaid plans), they generally offer excellent benefits to the beneficiary.
Grandparents may sometimes want to provide for something other than a college education, and in these cases a custodial account may be the answer. This type of financial instrument is most often in the form of a bank account or trust fund, administered by the grandparent with the grandchild as the beneficiary. Typically, custodial accounts are to be used at the grandchild’s discretion, but can be earmarked for a house or other significant purchase.
Either way, grandparents can enjoy a variety of options to help improve their grandchildren’s financial future.