Gifting assets to your grandchildren can reduce the size of your estate and the tax that will be due upon your death.
You may give each grandchild up to $14,000 a year without having to report the gift. If you are married, both you and your spouse can make such gifts. For example, a married couple with four grandchildren may give away up to $112,000 a year to their grandchildren 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).
You can pay for educational and medical costs for your grandchildren. You must be sure to pay the school or medical provider directly.
Consult your estate planning attorney for further information