Leave Money to Grandchildren: Intergenerational Planning

Quick answer: Leaving money to grandchildren in California is straightforward and legal. You can name grandchildren directly in your will or trust, give to them through a 529 plan or UTMA account, or set up a generation-skipping trust for larger estates. If you also want to skip your children entirely, you can do that too, as long as your documents make the choice explicit. Leaving an inheritance to grandchildren takes a little more planning than leaving it to adults, mainly because minors cannot hold significant property on their own, but the right structure handles that cleanly.

Families come to this question from very different places. Some grandparents want to help with college and are looking for the most tax-smart way to do it. Others have adult children who are financially set and would rather put the money where it will matter more. Some have concerns about a particular child’s stability, judgment, or creditors and want to pass wealth down a generation without it going through that child at all. Whatever the situation, there are good options, and leaving property to grandchildren in a will or trust is something California law fully supports.

Ways to Leave Money to Your Grandchildren

There is no single right answer here. The method that fits depends on how much you want to leave, the ages of your grandchildren, and how much control you want over how the money gets used. Here are the main options:

• Direct bequest in your will. You can name grandchildren as beneficiaries and leave them specific assets or a share of your estate. Simple, clear, and effective for grandchildren who will be adults when you pass. For minor grandchildren, your executor will need a plan for managing the inheritance until they reach adulthood (more on that below).
• Trust for minors. A trust lets you name a trustee to hold and manage the assets, set rules for how and when money is distributed, and protect the inheritance from being spent all at once. You decide the age at which a grandchild receives funds outright, what the money can be used for in the meantime (education, health, housing), and who manages it. This is often the cleanest solution for leaving property to grandchildren in a will or trust when grandchildren are young.
• Generation-skipping trust. If you want to bypass your children entirely and pass wealth directly to grandchildren (or further), a generation-skipping trust is designed for that purpose. It holds assets for grandchildren, lets you set the distribution rules, and may reduce the estate tax hit across generations. Federal generation-skipping transfer (GST) tax can apply to large transfers above the federal exemption (which was approximately $14 million per person in 2025 and increased further in 2026), but most families never owe it.
• 529 college savings plan. If helping with education is the goal, a 529 plan lets you contribute money that grows tax-free when used for qualified education expenses. You keep control of the account and can change the beneficiary if needed. Contributions can be front-loaded using a five-year election to move a larger lump sum without gift tax.
• UTMA or UGMA custodial account. These accounts let you make gifts to a grandchild now, with a custodian managing the funds until the grandchild reaches adulthood (18 or 21 in California, depending on how the account is set up). The grandchild gets full access at that age, so there is no ongoing control after that point.

How Do I Leave Money to My Grandchildren in California?

Start by deciding how much you want to leave and what you want the money to accomplish. Then choose the structure that fits. A will works for straightforward situations where grandchildren are adults. A trust works when you want more control, when grandchildren are minors, or when you want to skip a generation entirely. Education accounts work well alongside a broader estate plan.

One California-specific thing worth knowing: a minor generally cannot hold property directly if the value is above $5,000. Above that threshold, the court gets involved unless you have a plan in place, such as a trust or a UTMA account designated in your will. A trust named in your documents is usually the cleanest solution because it keeps everything out of the court system entirely.

A living trust is a flexible way to accomplish this. You act as your own trustee while you’re alive and keep full control over your assets. You name a successor trustee to step in after your death and follow the instructions you’ve set out, including who receives what, at what age, and under what conditions. That means your grandchildren can receive an inheritance without court delays, probate costs, or the risk of a large sum landing in a young person’s hands all at once.

Can I Skip My Children and Leave Assets to My Grandchildren Instead?

Yes. California law does not require you to leave anything to an adult child. You get to choose your beneficiaries. If you want to pass your estate directly to your grandchildren while leaving a child out, you can do it, and it will hold up as long as your documents make the choice clear and intentional.

The risk is silence. If your will or trust simply does not mention a child, that child may argue you forgot them rather than intentionally left them out, which opens a door to contest your plan. Naming the situation directly in your documents closes that door. This is one of the reasons working with an estate planning attorney matters more than doing it yourself.

A generation-skipping trust is the most common tool when the goal is to pass wealth directly to grandchildren. It keeps assets in trust for their benefit, lets you control the terms, and can also hold the inheritance across multiple grandchildren or even great-grandchildren if that is your intent.

What Happens to the Inheritance If a Child Dies Before Me?

California wills default to per stirpes distribution under Probate Code § 246. That means if a child predeceases you, that child’s share passes to their descendants, your grandchildren, proportionally. So even without specific planning, your grandchildren may inherit if a parent dies first. If you want to guarantee that outcome or control exactly how it happens, spelling it out in your trust or will is the right move.

What About Taxes When Leaving an Inheritance to Grandchildren?

For most families, taxes are not the deciding factor. California has no inheritance tax and no estate tax. The federal estate tax only applies to estates above the federal exemption, which is well above what most people have. The generation-skipping transfer tax works similarly, and most families never owe it.

That said, if you have a larger estate and you are planning to pass significant assets across generations, it is worth running the numbers with an attorney before you commit to a structure. The rules change, the exemptions change, and a small amount of planning can make a real difference at the high end.

Where Do I Start?

A good first step is sitting down with an estate planning attorney to sort out your questions and build a plan that actually carries out your wishes. That means looking at your whole estate, choosing the right structure for your grandchildren’s ages and circumstances, and making sure your documents are clear enough to hold up without a fight.

After years of helping California families pass wealth to the next generation, I would be glad to help you build a plan that works for your family. Call me at (805) 244-5291 to start with a free, in-depth consultation. Contact Ridley Law and get a practical plan from people who care about getting it right.

Frequently Asked Questions

How do I leave money to my grandchildren in California?

You have several options: a direct bequest in your will, a trust that holds and manages the inheritance for your grandchildren, a 529 college savings plan for education expenses, or a UTMA custodial account. For minor grandchildren, a trust is usually the cleanest choice because it keeps you out of the court system and lets you set the terms for when and how the money is used. A living trust with successor trustee instructions is a common way to handle this for California families.

Can I legally leave my estate to grandchildren instead of my children?

Yes. California does not require you to leave anything to an adult child. The key is to address that decision on purpose in your documents. A child who is simply left unmentioned has a better argument to contest the plan than one you deliberately and clearly left out.

What is the generation-skipping transfer (GST) tax?

It is a federal tax designed to keep families from skipping generations to avoid estate tax. It can apply when you transfer assets to grandchildren above a high federal exemption. Most families never owe it, but if you are moving large amounts, confirm the current IRS exemption before acting.

What happens if my grandchild is still a minor when I die?

A minor generally cannot hold property directly in California above $5,000 without court involvement. A trust solves this by having your chosen trustee manage the assets and release them on the schedule you set, so the inheritance is protected until your grandchild is ready for it, all without going through probate court.

Should I use a will or a living trust to leave assets to my grandchildren?

It depends on your situation, but a living trust often makes sense because it keeps you in control while you are alive, avoids probate, and lets you control the timing and conditions of what your grandchildren receive. A trust also handles minor beneficiaries cleanly, without court oversight. An attorney can tell you which fits your family after reviewing your assets and goals.