Generous, But Not Careless: How One Grandmother Is Planning Her Gifts

Meet Julia

Julia is 75, has a standing Tuesday pickleball game, and keeps the photos of her five grandchildren updated on the refrigerator. She has three grown children, all married, and she’s at the point where she’d like to help them while she can still watch the help land.

Julia also has a history. During her marriage, her former spouse made most of the money decisions, and many of them didn’t work out. After the divorce she found herself starting over in her fifties, saving with determination she hadn’t needed before. She rebuilt, and she’s proud of it.

So when Julia thinks about gifting, she has two goals that can seem to pull against each other. She wants to be generous with her family. She also never wants to feel financially exposed again. That’s a reasonable combination, and the good news is that it usually doesn’t require choosing one over the other.

Julia’s story is fictional, but her questions come up often. Here’s how someone in her position might think them through.

Question One: “Can I Give Now Without Losing Control?”

For many grandparents this is the real question underneath all the others. Some gifting tools hand the money over completely. Others let the giver keep a firm hand on the wheel.

A 529 education plan is often the best fit for someone like Julia. She can open it in her own name, list a grandchild as the beneficiary, and keep control of the account. If one grandchild gets a scholarship or skips college, she can usually change the beneficiary to another family member. The money grows tax free when it’s used for qualified education costs, including college, trade programs and some K-12 tuition. Under current financial aid rules, a grandparent-owned 529 generally doesn’t count against the student either.

There’s also a lesser known perk. If Julia wanted to make a larger gift, she could put up to five years’ worth of annual gifts into a 529 at once. In 2026 that’s up to $95,000 per grandchild, and with the proper election it doesn’t use up her lifetime gift exemption.

A Trump account is a newer option. It’s a special IRA for children under 18, opened by a parent, and grandparents can contribute to it (up to $5,000 per child per year from all family sources combined). Children born between 2025 and 2028 can also receive a one-time $1,000 deposit from the federal government. Think of it as a head start on retirement rather than a college fund, because the money is generally locked up until the year the child turns 18 and follows IRA rules after that. The rules are still being finalized, so the details may change.

A UTMA custodial account is the most flexible of the three, but it offers the least control later. A gift to a UTMA belongs to the child permanently. An adult manages it until the child reaches the age set by state law (often 18 or 21), and then the grandchild gets it outright. The money can be spent on anything. For a grandparent who has seen firsthand what happens when money is spent carelessly, that freedom can feel more worrying than generous.

Question Two: “What If I Want It to Pass Later Instead?”

Julia doesn’t have to give everything away today. Another option is to keep an investment account in her own name and add a Transfer on Death (TOD) designation naming her grandchildren as beneficiaries. She could split it five ways, 20% each.

This approach fits Julia’s need for security. The account stays hers, she can spend from it if life surprises her, and she can change the beneficiaries whenever she likes. At her passing, the account goes directly to the grandchildren without going through probate. Inherited investments in a taxable account also generally receive a “step up” in cost basis, which can reduce capital gains taxes for the grandchildren if they sell.

There are a few details to watch for:

• Future grandchildren. Naming five specific people leaves out any grandchild born later, so the form needs a refresh whenever the family grows.
• Skipping a generation. Leaving money directly to grandchildren bypasses Julia’s children. That may be exactly what she wants, but a family conversation now can prevent hurt feelings later.
• Keeping it consistent. Beneficiary designations generally override a will or trust, so they should match the rest of the estate plan.

Question Three: “What If a Grandchild Is Too Young?”

This was one of Julia’s biggest concerns, and it’s a smart one. A minor usually can’t take legal ownership of an inherited account. If a young grandchild inherits directly, a court may need to appoint a guardian to manage the money, which can be slow, costly and public.

There are cleaner ways to handle this. A beneficiary form can often name a custodian to manage a minor’s share under the state’s UTMA rules. Some families go further and name a trust as the beneficiary.

A trust lets Julia decide how and when each grandchild receives money. She might choose to pay for education first, then make partial distributions at 25 and 30, rather than a lump sum at 18. A trust can also add protection if a beneficiary later faces creditors, a divorce or a spending problem. That’s a risk Julia understands better than most.

Naming a trust as the beneficiary of an IRA takes extra care, though. Retirement accounts left to a trust come with special tax rules, and money kept inside a trust can be taxed at high rates even at modest income levels. The trust usually needs specific language to work well with an inherited IRA, so this is a conversation to have with an estate planning attorney.

Question Four: The Little Checkbox That Matters Most

Julia’s last worry is a common one: “What if one of my children passes away before me? Would their kids get left out?”

The answer often depends on two Latin phrases found on most beneficiary forms.

Per stirpes means “by branch.” Each child’s share belongs to that whole branch of the family. If one of Julia’s three children dies before her, that child’s one-third passes down to his or her own children.

Per capita generally means “by head” among the survivors. If one child dies first, the share may be split between the two living children, and the deceased child’s kids could receive nothing from that account.

Here’s the important part: simply writing down names doesn’t automatically make a designation per stirpes. The box often has to be checked, or the words written in, and the default on many forms is per capita. Each IRA, brokerage account, annuity and life insurance policy has its own form, so each one is worth reviewing.

Final Thoughts

Julia’s story is really about something many people feel: the wish to be generous without becoming vulnerable. Her past taught her that financial security isn’t guaranteed, and that lesson can make her a thoughtful giver.

The tools available today, from 529 plans to trusts to a simple per stirpes election, can help families give with both heart and structure. The right mix depends on each person’s goals, their comfort with giving up control and the ages of the people they want to help. In many cases a combination works best: some help now, some reserved for later, and clear instructions throughout.

If you find yourself thinking like Julia, start with a conversation. A thoughtful plan can let you be generous, protect what you’ve rebuilt and make sure every branch of your family is included.