Grandparents typically buy U.S. Series EE and Series I savings bonds for their grandchildren as secure, long-term gifts, often purchased through TreasuryDirect. Series EE bonds offer a guaranteed, fixed-rate return that doubles in 20 years, while Series I bonds provide inflation-adjusted interest. These, along with education bonds or premium bonds, offer tax-efficient ways to build future savings.
Five Smart Ways to Plan for your Grandchildren's Financial Future
It is a connection woven with shared stories, life experiences, and unconditional love. The influence of grandparents on their grandchildren and vice versa goes beyond mere family ties; it plays a crucial role in shaping character, values, and emotional well-being.
The Best Savings Bonds for Grandchildren
Series EE bonds are the steady Eddies of the bond world—reliable and predictable. They earn a fixed rate, and here's the kicker: They're guaranteed to double in value after 20 years.
Whether you buy an electronic bond or a paper bond, you must specify who owns the bond. You may name yourself, a child, yourself and someone else (either as another owner or as the beneficiary), or indeed anyone you want to give the savings bond to as a gift.
In many cases, you can open a junior savings account as soon as a child is born. But if your grandchild is older, it's not too late to get ahead with a Junior Pension, First Saver savings account or Premium Bonds.
State-administered 529 education savings plans are the go-to choice for many families, and their generous tax benefits are a big reason why. The money your grandchild withdraws for qualified education expenses — including private K-12 education expenses — is completely tax-free.
You can buy premium bonds for a child under 16 through NS&I, either online or by post. Anyone – a parent, grandparent, friend or other relative – can open the account, but has to nominate a parent or guardian to look after the bonds until the child is 16.
The golden rule for grandparents is to provide unconditional love and support while respecting the parents' rules and boundaries, acting as a supportive figure rather than a primary parent, and avoiding interference, competition, or undermining their authority; essentially, ask before acting, follow their lead, and be a "grand-playmate".
Key Takeaway. Grandchildren typically lose interest in grandparents at age 10 and into their teens. However, this varies significantly from family to family.
Of all the grandparenting styles, the compassionate grandparent is the most common and balanced. If this is your approach, you are likely close to your grandchildren, both emotionally and in terms of distance.
You may give each grandchild up to $16,000 a year (in 2022) without having to report the gifts. If you're married, both you and your spouse can make such gifts. For example, a married couple with four grandchildren may give away up to $128,000 a year with no gift tax implications.
Grandparents can open various accounts for grandchildren, including flexible Custodial Accounts (UGMA/UTMA) for general use, dedicated 529 Plans for education (which grandparents can own and control, with no financial aid impact from 2024-25), tax-advantaged Roth IRAs if the child earns income, or simple Kids' Savings Accounts, plus options like CDs and Savings Bonds, with choices depending on goals for flexibility, control, and tax benefits.
Custodial Brokerage Account (UGMA/UTMA)
A custodial brokerage account lets you invest in your child's name and manage it until they reach the age of majority (18, 19, or 21, depending on your state). It can be considered one of the best investments for kids when you want flexibility beyond education-only accounts.
The 7-3-2 rule is a financial strategy for wealth building, suggesting it takes 7 years to save your first major financial goal (like a crore), then accelerating to achieve the next goal in 3 years, and the third goal in just 2 years, leveraging compounding and disciplined, increased investments (like a 10% annual SIP hike). It highlights how returns compound faster over time, drastically reducing the time needed for subsequent wealth targets, emphasizing patience and consistent, growing contributions.
Grandparent Caregiver Relief (GCR)
Provides tax relief of up to $3,000 to working mothers who engage their parents, grandparents or in-laws as caregivers for their children.
Give more money away
Lifetime gifting is a straightforward way to begin reducing your IHT bill. By gifting money during lifetime, that would have been part of an inheritance anyway, you reduce the size of your estate so that there is smaller amount subject to IHT on your death.
You can typically inherit a large amount without federal taxes because the tax applies to the deceased's estate, not the recipient, and the exemption is very high: $13.99 million in 2025 and $15 million in 2026 per person, meaning most inheritances fall below this threshold. The key is that the estate's total value must exceed these limits for any tax to be owed by the estate. Inheritances themselves (cash, property) are generally not income, but earnings on them (like interest/dividends) or pre-tax retirement funds (like IRAs) are taxable.
One can also open up TFSAs for family members including minors, as well as to set up TFSAs for specific purposes like paying off a child's education.
You can give away a total of £3,000 worth of gifts each tax year without them being added to the value of your estate. This is known as your 'annual exemption'. You can give gifts or money up to £3,000 to one person or split the £3,000 between several people.
Buying for someone else's child:
The child's parent or guardian must give you permission to share their information with us. If the child and parent/guardian are not already NS&I customers, we'll ask the parent/guardian to provide proof of their own and their child's identity.