Grandparent Visitation Rights

The relationship between a grandparent and a grandchild can be one of great joy and importance for both grandparent and youngster. But sometimes an event such as a parent's death, divorce or estrangement can tear families apart and alter or sever relationships. After such events, the child's parents or guardian may block any further contact with grandparents, who may take legal steps to maintain contact with the children they love.

As such situations became increasingly common, in the 1970s state legislatures began enacting "grandparent visitation" statutes to protect the visitation rights of grandparents and other caretakers. Today, all 50 states have some type of grandparent visitation law. These statutes allow grandparents to ask a court to give them the legal right to maintain their relationships with their children's children. Mississippi's grandparent visitation rights law is codified at Miss. Code Ann. § 93-16-1 et. seq.

Miss. Code Ann. § 93-16-3(1) provides that a grandparent may petition to seek visitation rights of a grandchild whenever:

• A court of this state enters a decree awarding custody of a minor child to the parent who is not a child of the grandparent.
• A court of this state terminates the parental rights of the parent, who is a child of the grandparent, to the minor child.
• When parent, who is a child of the grandparent, of a minor child dies.

A grandparent not meeting the requirements above may be granted visitation rights by petition to the court if:

• The grandparent of the child had established a viable relationship with the child and the parent or custodian of the child unreasonably denied the grandparent visitation rights with the child; and
• The visitation rights of the grandparent with the child would be in the best interests of the child.

The Supreme Court of Mississippi held in Zeman v. Stanford that grandparents' visitation rights shall be granted where a viable relationship had been established between the grandparents and the grandchildren, contingent on the visitation rights being in the best interest of the grandchildren. 789 So. 2d 798 (Miss. 2001)

The term "viable relationship" means a relationship in which the grandparents or either of them have voluntarily and in good faith supported the child financially in whole or in part for a period of not less than six months before filing any petition for visitation rights with the child or the grandparents have had frequent visitation including occasional overnight visitation with said child for a period of not less than one year. Woodell v. Parker, 860 So. 2d 781 (Miss. 2003).

There are no firm rules for determining when a court will grant visitation; every case is decided on its own facts and merits. However, grandparents can take steps to improve their chances of gaining visitation rights. In deciding visitation cases, courts often consider the previous relationship between the grandparent and grandchild, and they look favorably on evidence of a consistent and caring relationship. For this reason, a grandparent should try to build a meaningful relationship with a child from the outset. If the child's parent rejects the grandparent's efforts to visit, the grandparent should keep a record of his or her attempted contacts and continue to make a reasonable effort to preserve the relationship with the grandchild, such as by sending gifts and cards. When it comes time to meet with an attorney, grandparents should have documentary evidence and names of witnesses to support their claim that visitation is in the best interest of the child. The Mississippi Supreme Court has laid out ten factors to be considered by a chancellor in determining grandparent visitation:

1. The amount of disruption that extensive visitation will have on the child's life. This includes disruption of school activities, summer activities, as well as any disruption that might take place between the natural parent and the child as a result of the child being away from home for extensive lengths of time.
2. The suitability of the grandparent's home with respect to the amount of supervision received by the child.
3. The age of the child.
4. The age, physical and mental health of the grandparents.
5. The emotional ties between the grandparents and the grandchild.
6. The moral fitness of the grandparents.
7. The distance of the grandparents' home from the child's home.
8. Any undermining of the parent's general discipline of the child.
9. Employment of the grandparents and the responsibilities associated with that employment.
10. The willingness of the grandparents to accept that the rearing of the child is the responsibility of the parent, and that the parent's manner of child rearing is not to be interfered with by the grandparents.

Miss. Code Ann. § 93-16-7 states that this chapter shall not apply to the granting of visitation rights to the natural grandparents of any child who has been adopted by order or decree of any court unless:

• One of the legal parents of such child is also a natural parent of such child; or
• One of the legal parents of such child was related to the child by blood or marriage prior to the adoption

However, this chapter shall apply to persons who become grandparents of a child by virtue of adoption.

Natural grandparents do not have a right to visit their grandchildren that is as comprehensive to the rights of a parent. Settle v. Galloway, 682 So. 2d 1032 (Miss. 1996).

One way to avoid a court battle is to try professional mediation. In mediation, the disputing parties engage the services of a neutral third party to help them hammer out a legally binding agreement that all concerned can live with. The disputing parties can control the process and they have a chance to explain their perspectives and feelings. In a court of law, on the other hand, the judge will ultimately make a decision based on laws that may seem unfair to one or both sides.

The following organizations can help you locate mediation resources in your area:

• The Mississippi Bar
• American Bar Association
• American Arbitration Association
• Association for Conflict Resolution
• Conflict Resolution Center.

In cases where a child's parents are divorcing, a way to guarantee visitation and avoid future litigation is to have grandparent visitation rights included in the divorce decree.

U.S. Supreme Court Gives Parents' Wishes Deference

In a case from Washington State, the U.S. Supreme Court recently ruled that unless there are allegations that a child's parents are unfit, the wishes of the parents should be given priority in resolving visitation disputes. Troxel et vir. v. Granville ( U.S. Supreme Court, No. 99-138, June 5, 2000). This ruling is influencing how other courts rule and states craft their visitation laws. Here are the facts of the case and how the Supreme Court ruled:

Tommie Granville and Brad Troxel had two daughters. After Tommie and Brad separated in 1991, Brad went to live with his parents, Jenifer and Gary Troxel, and regularly brought his daughters to his parents' home for weekend visits. In May 1993, Brad committed suicide. Although the Troxels at first continued to see their granddaughters on a regular basis, in October 1993 Tommie informed the Troxels that she had decided to limit their visitation with her daughters to one visit a month. In December 1993, the Troxels filed a court petition to increase the visitation. Washington State has a "permissive" state statute described above, one that allows a court to order visitation if it is in the "best interest of the child."

In 1995, the Superior Court struck a compromise, ordering more visitation than Tommie wanted but less than the Troxels were seeking. Tommie appealed, and the case went to the Washington Supreme Court, which ruled that the state statute unconstitutionally infringes on the fundamental right of parents to raise their children. The Troxels appealed the case to the U.S. Supreme Court.

The U.S. Supreme Court ruled 6 to 3 to reject the Troxels' request for extended visitation. The Court, however, did not say that the Washington State statute was unconstitutional, but only that the lower court did not apply the statute properly. The Court said that the lower court should have given special weight to what Tommie believed was in her daughters' best interest. Thus, the Court did not declare that a parent should always have the last word on visitation, but only that the parent's opinion should carry more influence with a court than a grandparent's own view of what is in a child's "best interest."

The Court's ruling has prompted a wave of lawsuits by parents challenging the constitutionality of their state's grandparent visitation statutes. In many cases, state courts are ruling in favor of the parents, meaning that it will be harder for grandparents in some states to obtain court-ordered visitation in certain situations. As a result, the "permissive" states are becoming more like the "restrictive" ones, giving the parent's view of the best interest of the child great weight.

For example:

• The Iowa Supreme Court ruled that Iowa's visitation statute was unconstitutional because it "places the best interest decision squarely in the hands of a judge without first according primacy to the parents' own estimation of their child's best interests." Santi v. Santi (Iowa, No. 77/00-0181, Sept. 6, 2001)
• In reviewing its state's statute, the Oklahoma Supreme Court held that before a judge can intervene and rule on whether or not visitation is in a child's best interests, the grandparent must prove that there is a threat of harm to the child in the absence of visitation. Neal v. Lee (Okla., No. 93670, Nov. 7, 2000)
• However, the South Dakota Supreme Court has ruled that the "best interests of the child" standard may still be used as a guide in that state. Currey v. Currey (S.D., No. 22184, August 7, 2002).

What Now?

The Troxel ruling and subsequent decisions by state courts suggest that it may be very difficult for the grandparents to obtain court-ordered visitation where the family is "intact". In such cases, mediation may be the best avenue if the family relationship has not become too strained. Grandparents will have a better chance where the parents are separated, particularly in cases where the parents disagree over visitation. Here, many courts will feel compelled to step in and make the determination of what is in the child's best interest.

But as one commentator has put it, the Supreme Court's message is clear: The best way to have a relationship with your grandchildren is to have a good relationship with your children.

Gifts to Grandchildren

Gifting assets to your grandchildren can do more than help your descendants get a good start in life; it can also reduce the size of your estate and the tax that will be due upon your death.

Perhaps the simplest approach to gifting is to give the grandchild an outright gift. You may give each grandchild up to $12,000 a year 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 $96,000 a year with no gift tax implications. In addition, the gifts will not count as taxable income to your grandchildren (although the earnings on the gifts if they are invested will be taxed).

But you may have some misgivings about making outright gifts to your grandchildren. There is no guarantee that the money will be used in the way you may have wished. Money that you hoped would be saved for educational expenses may instead be spent on a fact-finding mission to Fort Lauderdale. Fortunately, there are a number of options to protect against misuse of the funds by grandchildren.

Direct Payment for School or Health Costs

You can pay for educational and medical costs for your grandchildren. There's no limit on these gifts, meaning that you can pay these expenses in addition to making annual $12,000 gifts. But you have to be sure to pay the school or medical provider directly.

Custodial Accounts Under the Uniform Gifts to Minors Act (UGMA) or the Uniform Transfers to Minors Act (UTMA)

Both of these Acts allow you to make gifts to a custodial account that parents can establish for a minor child. Since the account is in the name of the child, the tax liability is often shifted to the child, who presumably is in a lower tax bracket than you or the grandchild's parents. Gifts to such accounts are irrevocable, but you retain control of the money and decide how it will be invested.

UGMA and UTMA differ in the type of property they permit a person to transfer: States usually restrict UGMA investments to life insurance, cash and certificates of deposit, while UTMA allows a wider variety of investments, including mutual funds, stocks, bonds, real estate — even artwork.

Either type of account should be managed by someone other than the parent; otherwise, the parent will be responsible for taxes on the account income. For children over age 14, all income is taxed at the child's rate. For children under 14, income below $800 is not taxed, income from $800 through $1,600 is taxed at the child's rate, and income over $1,600 is taxed at the grandparent's rate.

The major downside of these accounts is that custodians must turn the money over to the child when he or she reaches the age of majority (18 or 21, depending on the state). The child may then do as he or she wishes with the money — and it may not be what you would prefer. In addition, as with custodial accounts, the child's sudden ownership of the account funds could jeopardize his or her eligibility for financial aid for college.

Gift Trusts

The above options have some serious drawbacks. Either there are no tax or estate planning advantages, or you have no control of the funds (or lose control after a certain point), or the money could affect a grandchild's eligibility for financial aid. An option that overcomes many of these problems involves transferring money into a trust established to benefit a grandchild. With the help of an attorney, you can draft a trust that reflects your express wishes about when the income and principal will be available to the grandchild, and even how the funds will be spent.

Transferring funds into such a trust offers the following benefits:

1. You can reduce the size of your estate by transferring up to $11,000 into each trust you create for each grandchild. No gift taxes will be due in connection with the transfers;
2. Although the trust owns the assets, you control them as trustee and can decide what type of investments to make;
3. Income earned by the trust from amounts that you've deposited will not be taxed to you; the trust pays the taxes;
4. Amounts deposited in trust, and the income earned from those funds, will be used for the benefit of your grandchildren; and
5. You can provide that the trust terminate at any age you specify.

In order to qualify for these benefits, however, certain restrictions apply. These trusts are complex legal documents and should not be set up without the help of an experienced attorney. As a result, the chief downside of such trusts is the cost of establishing and maintaining them, which you should discuss with an attorney before going ahead with a trust.

As a final note on establishing such trusts, you must be totally comfortable with this gift planning strategy and the amount of money available to you in your estate. In short, you should only make gifts if you feel certain that the amount of funds remaining in your name and the amount of income they will produce will be adequate for your needs.

529 Accounts

This new type of account, named for Section 529 of the Internal Revenue Code, enables you to reduce your taxable estate while earmarking funds for the higher education of a grandchild (or any other family member). Funds contributed to such accounts are invested to pay for a grandchild's college tuition, room and board, or other expenses. The account funds are usually invested in mutual funds, and under the tax law passed in 2001 the earnings from these accounts are tax-free beginning in 2002 (previously they were taxable to the beneficiary when used to pay for college).

You can contribute up to $11,000 per year ($22,000 for a couple) to 529 accounts without incurring a gift tax. Or, if you prefer, you can contribute up to $55,000 ($110,000 for a married couple) in the first year of a five-year period, as long as there are no additional gifts to that same beneficiary over the five years. In other words, 529 accounts can be a quick way of getting a sizable amount of money out of your taxable estate (although if you die within the five-year period, the portion of the contribution allocated to the years following your death would be included in your estate). An added benefit is that donors to these accounts can take the money back later if needed, although they pay a penalty of 10 percent of earnings. (However, this power to control the assets means that the savings in a 529 account will be counted as an available asset under Medicaid rules in the event the account holder requires long-term care.)

If the grandchild uses the funds for any purpose other than higher education, the earnings are taxed as ordinary income to the account owner (you) and a 10 percent penalty is assessed on investment gains. Since you are the account owner, such accounts generally do not affect a child's eligibility for financial aid. This change may increase a student's chances for financial aid since qualified withdrawals will no longer be considered income to the student. Moreover, you can change beneficiaries at any time, as long as the new beneficiary is a member of the original beneficiary's family. (The new tax law expands the list of family members to include the first cousin of the original beneficiary.) Most states now permit or are planning to permit 529 account plans, and many investment firms now offer them as tax- and estate-planning vehicles for their clients.

The Web site www.savingforcollege.com can help you compare the many state plans.

Other Gift Vehicles

IRAs: You can make contributions to your grandchildren's regular, Roth or Educational IRAs. Roth and Educational IRAs are explained in the Retirement Planning section.

Roth IRAs can be a particularly good way to help a grandchild build a nest egg. The amounts contributed to such accounts aren't tax deductible, but the earnings accumulated can be withdrawn at age 59 ½ completely tax-free (as long as certain conditions are met). This tax-free compounding can quickly add up: If a 15-year-old contributes $2,000 to a Roth today, the investment will be worth $146,000 when the child turns 60 (assuming a 10 percent annual return). Also, starting five years after the account has been set up, first-time homebuyers can withdraw up to $10,000 tax-free. And if Roth IRAs are used to pay college tuition, the earnings are taxed at the child's rate and early withdrawal penalties do not apply.

Savings Bonds: Don't overlook U.S. Savings Bonds, the most widely held type of security in the world. Bonds increase in value monthly and interest is compounded semiannually. Moreover, interest is free from state and local taxes, and federal income tax is deferred until you redeem the bonds. Provided you meet certain eligibility requirements, you can reap special tax benefits if bonds are redeemed to pay for college expenses.

Series EE and the new Series I Bonds make great gifts for grandchildren. Series EE Bonds sell for half their face value. The bond denominations range from $50 to $10,000. If not redeemed when they mature, the bonds will continue to earn interest for up to 30 years. Series I (or Inflation-Indexed) Savings Bonds come in denominations ranging from $50 to $10,000 and are issued at face value. The earnings rate, adjusted semiannually, is a combination of a fixed interest rate at the time of purchase and the rate of inflation. These bonds have a 30-year life. Current rates for both the EE and I Bond are available by calling 1-800-4USBond. Additional information on U.S. Savings Bonds can be found at the Web site www.savingsbonds.gov Savings bonds can now be ordered directly online with a credit card!

Still more options: If you have a taxable estate, other options may also exist, such as life insurance trusts and family limited partnerships. Check with your elder law attorney or tax advisor for more information about these planning options.