Grandparents as Parents: Planning is Critical

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Grandparents hold a special place in every grandchild’s life. However, some grandparents raise their grandchildren and serve as their primary caregivers. Approximately 7% of all children under age 18 live with a grandparent. 

There are many reasons why grandparents are stepping in to raise their grandchildren. Some reasons include divorce, teenage and unwed pregnancy, incarceration of parents, mental illness, drug or alcohol addiction, and poverty.

If you are responsible for raising your minor grandchildren, it’s crucial to plan to make sure they are cared for if something happens to you. Because grandparents are often older during their grandchildren’s formative years, careful planning becomes even more important. At a minimum, your plan should include:

grandparents
  • Will naming who should care for your grandchild if you pass away. 
  • General Durable Power of Attorney giving someone authority to handle your financial matters if you become unable to do so..
  • Healthcare Power of Attorney appointing someone to make medical decisions on your behalf if needed.
  • A “HIPAA” form authorizing providers to release medical information for you and your grandchild.
  • Medicaid planning provisions in your documents to help protect assets and plan for Medicaid eligibility for yourself, your spouse, and your grandchild.

Families with a substantial amount of assets may need to plan more thoroughly. Grandparents should be aware of the generation-skipping transfer (GST) tax. The GST tax applies whenever anyone gives assets to someone who is two or more generations younger than they are. The GST tax rate is 40% on transfers above the lifetime GST tax exemption amount ($13.99 million per individual in 2025). This tax is in addition to the regular estate tax. Various techniques can be used to pass assets for the benefit of grandchildren without incurring the GST tax.

  • Paying the grandchild’s tuition and medical expenses directly to the provider.
  • Setting up an irrevocable trust to be used to benefit the grandchild.

Raising a grandchild offers the opportunity to provide a stable, loving home. Thoughtful planning can strengthen that stability. Let the McGee Law Firm guide you in creating a plan that protects both your future and your grandchild’s. Schedule a free consultation in our Southlake or Fort Worth office. 

From the desk of Attorney Brandon McGee

Brandon McGee
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