When you are planning your estate there are going to be different people on your inheritance list who are going through different stages of life. The ages of the people that you are leaving inheritances to can help dictate how you should proceed with regard to each individual.
When it comes to grandchildren you have various options. If you are interested in leaving behind resources for minor grandchildren you could give gifts in trust. If you go this route you could utilize the $13,000 annual per person exemption to fund a trust without incurring any gift tax liability.
Another option would be to take advantage of the Uniform Gifts to Minors Act or Uniform Transfers To Minors Act to set aside financial assets, including securities, for the benefit of a minor via conveyance into a custodial account.
If you have grandchildren who are going to college you could give them early inheritances by paying their tuition bills. In fact, if your assets exceed the estate tax exclusion amount (which will be just $1 million next year) you can gain some tax benefits as you pave their way to future successes.
Gifts of tuition payments are not subject to the federal gift tax. So, if you were going to give inheritances to your grandchildren equal to or exceeding the amount of their tuition these bequests would potentially be taxable. By paying their tuition you are utilizing resources for their benefit in a tax-free manner.
Because this educational exemption only extends to tuition you could assist with books, fees, and living expenses by taking advantage of the $13,000 per year, per person annual gift tax exemption.