As a grandparent, it’s only natural to want to spoil your grandchildren and help them start adulthood on stronger financial footing.

If you’re looking to leave a legacy for your family’s future generations, gifting money can be a thoughtful and generous way to support them in their journeys. Here are some options to consider as you formulate a plan that works best for everyone involved.

Writing a check

Your knee-jerk instinct may be to simply write your grandchild a check, which is certainly the most foolproof and easy approach to providing financial support, just keep in mind that this gift cannot exceed $18,000 per recipient per year in 2024; otherwise, you’ll have to report it to the IRS and may have to pay tax on it. And if you have a specific intention behind the funds, make sure to be clear on what that is to ensure that your grandchildren put it to proper use.

Setting aside money for college

The cost of further education today may blow your mind. According to the US News & World Report, the average annual total for tuition and fees is $10,662 for in-state public schools, $23,630 for out-of-state public schools, and a whopping $42,162 for private schools—and that’s not even including other essential expenses like housing, food, and textbooks. It’s no wonder, then, that the average student loan debt in 2023 was $38,290. If you’re looking to help your grandchildren out with this hefty bill, setting aside specifically for their education may be the way to go. You can store your savings in a high-yield savings account to contribute regularly or opt for a 529 college savings plan, which offers various tax benefits. To help you decide ont he best options, consider working with a professional financial advisor.

Creating a trust fund

There are various types of trust funds you can set up using your own assets. A trust fund is a legal arrangement where you transfer assets to a separate account and assign a trustee to it, who manages and distributes them per your instructions. Not only does this give you more control over who your gifts go to, when they are delivered, and what they must be used for, but it also provides tax benefits, asset protection, and long-term support. Setting up a trust fund can be complex and requires careful planning, so it’s important to consult with a financial advisor and an attorney to help ensure that it is structured properly and meets your specific needs and goals.

Setting up a simple savings account

If your grandchildren are still small, opening a joint savings account with them could be a great option. Besides gifting them money, it could be an instrumental way to teach them how to save money and build their financial future. Be sure to look for an institution that offers competitive interest rates and low fees. You could then make deposits for them and help them develop good saving habits that can last a lifetime.

Leaving them money after you’re gone

If you want to provide security for your grandkids in the long term, you could name them as beneficiaries on your life insurance. Single-premium life insurance policies are particularly well-suited for this purpose. By fulling funding your policy up front with a lump sum payment, you can guarantee your loved ones will have a payout should anything happen to you. Keep in mind, though, that life insurance companies won’t award benefits to a minor, so in case you pass before they come of age, you might want to set up a life insurance trust for them. That way, the funds can be funneled there with fewer complications, at which point a trustee can manage the funds on your grandchild’s behalf according to your wishes.

Remember, the most important gift you can give your grandchildren is the gift of love and support. But by investing in their financial well-being, you can go the extra mile in helping ensure their happiness and prosperity for years to come. For more guidance in deciding which avenue to take, seek out the expertise of a licensed financial professional, who can walk you through your options so you can identify the best one for you and your loved ones.