It’s a nice thing to do to pass on assets to your grandchildren and it can be used to help reduce the size of your estate. In 2020, you can give each of your grandchildren up to $15000 under the gift tax without having to report those gifts. While you might choose to otherwise pay school costs or health care costs directly or place the money inside a custodial account, you might want to re-evaluate the options and benefits for placing that money inside a trust. 
Using an experienced and knowledgeable estate planning attorney, you can draft a trust that expresses your wishes about when the principle and the income from the trust will be available to that grandchild.
Furthermore, you can place some stipulations about how those funds will be spent. Moving funds into a trust rather than other gifting strategies includes several different advantages, such as:
- Reduce the size of your estate by transferring up to $15000 each year into each trust for each grandchild.
- You still get to control the assets inside the trust as the trustee and can determine what type of investments are most relevant.
- Income that is generated by the trust from the amounts you deposited will not be taxed to you, instead the trust pays the taxes.
- You can stipulate that the trust terminate at any age that you specify.
- Funds that are deposited into the trust and the income earned from those funds will be used for the benefit of your grandchildren.
It is important to recognize that certain restrictions apply if you want to qualify for these benefits. Make sure you discuss your options with a knowledgeable estate planning lawyer. Our trust planning law office in Maryland guides you through the process of deciding how to create a trust and how to most appropriately leverage this for your grandchildren and other heirs.