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Author: 060637 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75616  
Subject: Retirement for GrandChildren Date: 12/24/1999 2:40 AM
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I plan on putting 5K into some sort of vehicle which the grandchildren (ages 1-3)can't touch until they are 50 or 55. The problem is the money will come from a IRA and I'm not sure how to stucture the vechicle so they won't pay taxes every year?
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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 16843 of 75616
Subject: Re: Retirement for GrandChildren Date: 12/24/1999 9:33 AM
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Greetings, 060637, and welcome. You asked:

<<I plan on putting 5K into some sort of vehicle which the grandchildren (ages 1-3)can't touch until they are 50 or 55. The problem is the money will come from a IRA and I'm not sure how to stucture the vechicle so they won't pay taxes every year? >>

In the absence of a formal trust with a Crummey provision (something you need a lawyer to develop), there is no way you will be able to restrict access to the fruits of that gift when the kids reach the age of majority. For further details on making gifts to and investing for children, see our Investing for Kids area at http://www.fool.com/money/investingforkids/investingforkids.htm.

Regards..Pixy

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Author: Bobbcat Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 16853 of 75616
Subject: Re: Retirement for GrandChildren Date: 12/24/1999 5:42 PM
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The problem is the money will come from a IRA and I'm not sure how to stucture the vechicle so they won't pay taxes every year?


If the money is coming from your IRA during your lifetime, YOU will be taxed on the distribution.
The only times someone other than the IRA owner is not taxed on a IRA distribution are
- QDRO distribution to ex-spouse
- Beneficiary distribution due to death

To prevent taxes on the income generated, refer to Pixy's post on Crummey Trusts.

*Cat

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Author: parkrimp Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 21928 of 75616
Subject: Re: Retirement for GrandChildren Date: 5/12/2000 8:19 PM
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Greetings, 060637, and welcome. You asked:
<<I plan on putting 5K into some sort of vehicle which the grandchildren (ages 1-3)can't touch until they are 50 or 55. The problem is the money will come from a IRA and I'm not sure how to stucture the vechicle so they won't pay taxes every year? >>

I had similar thoughts for my grandchildren. If something goes into their name today it may limit their ability to get education loans and grants. Then there is the concept that their parents will see to their education. With my children they do not see bright prospects for there being a Social Security Fund when they retire. So, I am contemplating contributing to a stock fund for them which they would not see until they retire. Some TMF person suggested setting up a broker account in your name but separate and earmarked to each child which would go to them when you died. If you are persuasive enough they might let it grow; but as you will be gone, they could do what young people do and blow everything. I am a baby, novice Fool so there may be tons of things wrong with this concept. If there are I trust other Fools to shoot it full of holes.

Cheers,
Duane

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Author: Helter Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 21947 of 75616
Subject: Re: Retirement for GrandChildren Date: 5/15/2000 9:45 AM
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I think you left a hint for us in your last line:

If you are persuasive enough they might let it grow; but as you will be gone, they could do what young people do and blow everything. I am a baby, novice Fool so there may be tons of things wrong with this concept. If there are I trust other Fools to shoot it full of holes.

Its my impression that concerns like this are precisely what TRUSTS are for. However, that's the extent of my knowledge on the subject. Any knowledgeable trust people out there to help out these guys who want to leave money to Grandkids but not see it blown on sports cars in the kids 20's?



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Author: jkrou Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 22251 of 75616
Subject: Re: Retirement for GrandChildren Date: 5/29/2000 3:54 PM
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Trusts are for amounts larger than $50k since they have their own tax ID, tax liability, and life. Now if you have that much to pass down to the grandkids, you can certainly set up a living trust that will have payouts to the grandkids at certain ages or dates. The problems are what happens if they do not make it to that magic date/age? Also, a qualified attorney would have to set up the trust and you would have to have a VERY trustworthy individual as trustee who would be alive at the dates/ages of your grandchildren for distributions. One idea is to have the attorney's firm become the trustee since there would only be some annual maintenance charges each year for watching over the account. Of course, in this case you would want to choose a law firm that is well established as well as experienced in estate law matters.

Jenn

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