Leave Money to Grandchildren: Intergenerational Planning

Short answer: Yes. California lets you leave your estate to grandchildren and leave a living child out, as long as the documents say so on purpose. The statute that protects an overlooked child only covers children born or adopted after you signed (Prob. Code §21620), and even that protection is defeated when the omission is intentional and appears from the instrument (Prob. Code §21621). For minor grandchildren, the real work is choosing who holds the money until they’re old enough to have it.

Some grandparents want to fund college. Some have adult children who are already set. Some are worried about a particular child’s judgment, marriage, or creditors and want the money to skip that branch. Each goal points to a different structure.

Law verified against Prob. Code §§240, 245, 246, 890, 3401, 3413, 3905, 3920, 3920.5, 13100, 21110, 21620, 21621, Rev. & Tax. Code §§13301 and 13302, and 26 U.S.C. §§529, 2010, 2613, 2631, 2641 and 2651, 2026. This is general information, not legal advice for your situation.

Can you skip a child and leave assets to grandchildren?

You can. California has no rule that an adult child must inherit anything. The protection people have heard about is the omitted child statute, and it’s narrower than most assume. It gives an intestate share only to a child born or adopted after all of your testamentary instruments were signed (Prob. Code §21620). A child who was alive when you signed and left out doesn’t get a statutory share.

Even an after-born child takes nothing under that statute if your failure to provide for the child was intentional and that intention appears from your documents (Prob. Code §21621(a)). So the fix is the same in every case: name each child in the will or trust and state plainly that the omission is deliberate. That sentence closes off the argument that you forgot someone.

If family conflict is likely, pair that sentence with the rest of the plan. I cover the mechanics in disinheriting someone in a California will.

Ways to leave money to grandchildren

• A gift in your trust or will. You name grandchildren as beneficiaries of specific assets or a share of the estate. It works cleanly for grandchildren who are adults. For minors, it needs a second layer, covered below.
• A separate trust share for each grandchild. Your successor trustee holds the share and pays for education, health and support until the ages you pick. I use this option most often for young grandchildren.
• A custodian under the California Uniform Transfers to Minors Act. Your trustee or executor can transfer a grandchild’s share to a custodian if your will or trust authorizes it (Prob. Code §3905(a)). It’s simpler than a trust, and the grandchild gets everything at the end.
• A 529 plan. Earnings aren’t taxed when used for qualified higher education expenses (26 U.S.C. §529(c)(3)(B)). You can also elect to spread a large contribution over five years for gift tax purposes (26 U.S.C. §529(c)(2)(B)).
• A generation-skipping trust. For larger estates, a long-term trust can hold assets for grandchildren and later generations, with the federal GST exemption allocated to it.

A living trust ties these together. You stay in control during life, and your successor trustee follows your written instructions after death without a probate case.

What happens if a grandchild is still a minor?

A minor can’t manage a real inheritance, and California only lets a parent receive property for a minor without court involvement when the minor’s total estate is $5,000 or less (Prob. Code §3401(c)). Above that, if there’s no guardian of the estate, a court may appoint one, order the money into a blocked account, or transfer it to a custodian (Prob. Code §3413).

You avoid the court by picking one of these in advance:

• A trust share. You set the ages, the permitted uses and the trustee. There’s no statutory cutoff age, so you can stagger distributions or hold funds longer for a grandchild who needs more time.
• A UTMA custodianship. Custodial property goes to the grandchild at 18 unless the transfer delays it (Prob. Code §3920). When the transfer comes from a will or trust, the document can push that age out, but never past 25 (Prob. Code §3920.5(c)).

For more on how these accounts end, see UTMA accounts in California and the age-18 problem.

What if one of my children dies before me?

If your trust or will leaves a share to a child who dies first, California’s anti-lapse statute generally passes that share to the child’s issue, your grandchildren (Prob. Code §21110(a)). It doesn’t apply if your document expresses a contrary intention, and a requirement that the child survive you counts as one (Prob. Code §21110(b)).

When a document leaves property to issue or descendants without saying how, the default is the method in Prob. Code §240, which divides at the nearest generation with a living member (Prob. Code §245(a)). If your document says “per stirpes” or “by right of representation,” the property is split into equal shares for each child of the named ancestor, counting a deceased child who left issue, and each deceased child’s share then passes down that line (Prob. Code §246(a)-(b)). Those two methods can give different numbers when more than one child has died, so I write the method out rather than rely on a default. The difference is explained in per stirpes versus per capita in California.

What about taxes on gifts to grandchildren?

California doesn’t tax inheritances or gifts. Proposition 6 bars the state from imposing a gift, inheritance or succession tax (Rev. & Tax. Code §13301). The only California estate tax is pegged to the federal credit for state death taxes (Rev. & Tax. Code §13302), and Congress repealed that credit (26 U.S.C. §2011, repealed), so nothing is owed.

The federal side is the generation-skipping transfer tax. A grandchild is a “skip person” because they’re two generations below you (26 U.S.C. §2613(a)(1)). A transfer to a skip person can be taxed at the maximum federal estate tax rate times the inclusion ratio (26 U.S.C. §2641(a)). Every person gets a GST exemption equal to the estate tax basic exclusion amount (26 U.S.C. §2631(c)), which is $15,000,000 for 2026 (26 U.S.C. §2010(c)(3)(A)).

If your child has already died when you make the gift, that child’s children move up a generation for GST purposes (26 U.S.C. §2651(e)(1)), so a gift to them isn’t treated as a generation skip at all. The generation-skipping transfer tax glossary entry has more.

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

A trust usually works better. Property passing under a will generally needs a probate case before anyone receives it, unless the estate fits within the small estate limit of $208,850 for deaths on or after April 1, 2025 (Prob. Code §13100, as adjusted under §890), and a minor’s share still needs a custodian or trust on the far side. A funded trust lets your successor trustee manage each grandchild’s share privately, on the timeline you set, with no court case. For grandchildren who are adults and a modest estate, a direct gift can be enough.

Where do I start?

Before we talk, decide who gets what, the age at which each grandchild should control the money, and who manages it until then. I work with clients across California by phone and Zoom, and the signing happens with a mobile notary who comes to you. More on how I build these plans is on my grandchildren estate plans page and the main estate planning page, or you can contact Ridley Law to set up a call.