Although IRAs have no special provisions for naming grandchildren as beneficiariesfidelity.com explains, you have several options for having them receive IRA assets as part of your estate plan:

  • Name them all as beneficiaries; if any pass away prematurely, the assets would be equally divided among the rest.
  • Name the grandchildren, but add “per stirpes”.  If one of the beneficiaries passes away before you do, his/her share would automatically go to his/her descendants.
  • Name the grandchildren contingent beneficiaries, with your spouse as primary beneficiary.

While all of the above are options, careful attention should be paid to naming minor grandchildren as beneficiaries as state rules may require a guardianship be established in court for the funds to be collected. Working with an estate attorney can help you accomplish your objectives without the hindrance of a guardianship.
The rules for naming grandchildren as beneficiaries of 401K or other retirement plans are similar, but, if you’re married and are not naming your spouse as primary beneficiary, you’ll need written permission from your wife or husband.

“Remembering our grandchildren in our estate plan can be a wonderful gesture of love,” observes Pennsylvania attorney Jeffrey Marshall, but, he cautions, for a grandchild with special needs, even a small inheritance can create big problems for them. Recipients of SSI and Medicaid are allowed to have only a modest amount in assets. A special needs trust is the best way to include a disabled grandchild in your estate plan.

Inheritances for grandchildren work best when there’s a conversation attached, but no strings, says Bambi Holzer in grandparents.com. Holzer offers a few pieces of advice about giving money to grandchildren:

“To help ensure that grandchildren respect their inheritance – whatever their age, whatever the amount – start a conversation with them now about where the money came from, how you earned it, and what you hope they’ll do with it.”

  • Be careful not to control the inheritance.
  • Be very specific in the will or trust about how much money and whether the money is to be divided equally, or in unequal amounts, among your grandchildren
  • Consider giving your grandkids their “inheritance” while you’re still alive.

At Geyer Law, our focus is on understanding your particular goals and concerns so that we can design an estate plan that accomplishes your objectives, including providing for your grandchildren! 
– by Rebecca W. Geyer & Associates