<p>I think you need to do what will work for your family. I’m trying to think “out of the box” here. Municipal bonds? What about stocks (not liquid)? </p>
<p>^Agreed. Do what works for YOUR family. I feel there has to be a way to accomplish your parents’ goal. I think I would contact a second estate planning attorney for another point of view. </p>
<p>Whether it’s cash, bonds or stocks, to be out of the estate, it had to be given away. If grandparents have any control over the gift money, it won’t be considered given away. They can dictate terms of distribution of money through irrevocable trusts. Even if they agree to setting up trusts, it will be hard to keep it secret. There are certain rules on how irrevocable trusts are set up and maintained. One of the rules requires trustees send the beneficiary a letter annually stating what they are entitled to.</p>
<p>Post #58, it is very common for grandparents to treat all in a generation the same, whether one son had 8 kids and one daughter only 2; all 10 grandchildren to be treated as equals. Some people do set it up so the group of grandchildren from each child takes only that child’s share, so in the previous example the 8 grandchildren would split 1/2 and the other 2 would split 1/2. It’s important to know which the grandparents prefer.</p>
<p>My father only has 1 brother, and at the time my grandfather wrote his will only my father had children (5). Before my grandfather died, my uncle had 2 and we had one more, so 8 all together. We were each to get a specific amount and then my father and uncle would each get 1/2 of the remainder. That’s how my grandfather wanted it. Alas, he died penniless and nobody got nothin’.</p>
<p>My estates teacher told us there is nothing like watching two sisters go after a family ring or Aunt Bessie’s rolling pin. He told us when writing a will, put the method of selection in it - oldest to youngest, by value, by sentiment, naming certain items to go to certain children. There are all kinds of methods, but only one Christmas candy bowl that seven cousins will want, so spell out the method.</p>
<p>So…other than a trust…or the difficult savings bonds (too bad this is no longer a viable option)…what other options could these grandparents choose? This is a very generous gift! It would be nice to think of some options.</p>
<p>Would my suggestion of municipal bonds be worth exploring?</p>
<p>Muni bonds - state income tax filing considerations if not double exempt?</p>
<p>How would municipal bonds will be titled?</p>
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Except for any kids under the age of 18, where a grandparent or another adult would be required to maintain control of the funds. For example the grandparents could open custodial accounts for the younger grandkids (UTMA) and gift the money to those accounts. Legally the money belongs to the kids and qualifies as a gift, even though the grandparents could continue to manage the funds until the kids reach 18, or 21 in some states. If the money remained in a non-interest/dividend bearing account it would not cause tax consequences for the grandkids or their parents. Not the best investment strategy, but it solves the problem of reducing the estate. </p>
<p>One thought occured to me. OP said parents have concerns that one family may choose to live a more lavish life if they know money is set aside. Well, in my experience, when parents are wealthy, kids know about the money and do the match. Even if money is not set aside specifically for the kids and grandkids, I would bet that family has done the math and is aware of the future bequest. One note, if that family is told a large sum is going to the kids for college, you are right, they may save less for college, but they might save more for their own retirement. Also, didn’t the parents already pay for other grandkids university? If so, I would bet that family is planning on the same benefit.</p>