In a large number of our cases, grandparent contributions factor heavily into the budget providing for the children’s support. That is, many have opened a 529 college savings account and contribute regularly; many pay tuition directly to the pre-school or the SAT preparatory center and many pay for sleep away camp up in Maine — all tax free intergenerational distributions of wealth.
For divorcing couples this can be particularly helpful as the income stream that has supported one household is being stretched to take on a second home. The conversation in mediation often entails how to account for the grandparents’ contributions particularly because the signed divorce agreement does not include Grandma and Grandpa. They are not parties to the divorce and therefore are under no legal obligation to the kids. Additionally, when couples examine how the law would require them to contribute to the educational needs of their children, they often discuss how to view the “grandparent credit.” Does it come off of the payor’s total monies due or does it come off of the top with the parties sharing the remaining balance in some proportion that they then negotiate?
These can be delicate conversations — an adult child is essentially asking for a commitment from an aging parent and sometimes that commitment comes with strings attached. And on the other hand, the conversations may not be so difficult; depending on the personalities and finances involved, many grandparents give with pleasure. The parent/child dynamic of this generation plays a role in the mediation.
Finally, there is the reality of financial planning. What makes most sense when the child applies for financial aid may surprise you: