It is permissible for a person to divide his wealth among his children, on condition that he treat them equitably, but it is preferable for him not to do that.
It says in al-Insaaf (7/142): It is not makrooh for one who is still living to divide his wealth among his children, according to the correct opinion. It was narrated that he [i.e., Imam Ahmad, according to another view that it is makrooh] said in ar-Riaayah al-Kubra: It is makrooh for him to divide his wealth among his heirs when he is still alive if there is a possibility that more children may be born to him. End quote.
In Fataawa al-Lajnah ad-Daa'imah (16/463) it says: We advise your father not to share out his wealth during his lifetime, because perhaps he may need it after that. End quote.
But if he does go ahead and share out his wealth among his children, then what he must do is treat them equitably and give each male double the share of each female.
Shaykh al-Islam Ibn Taymiyah (may Allah have mercy on him) said in al-Ikhtiyaaraat (p. 184): It is obligatory to be equitable by giving to one's children in accordance with their shares of inheritance. This is the view of Ahmad. End quote.
It says in Fataawa al-Lajnah ad-Daa'imah (16/197): If your father wants to divide his wealth, or some of his wealth, among his children, then he must share it among the males and females in accordance with the shares of inheritance prescribed in Islam, with each male getting the share of two females. End quote.
Once it is established that it is obligatory for the father to be equitable in giving, then does this ruling also apply to the grandfather; in other words, is it obligatory for the grandfather to be equitable in giving to his grandchildren, or is that equity not required in his case?
The view of the majority of scholars is that in this case it is mustahabb (encouraged), but it is not obligatory.
Shaykh Ibn Uthaymeen (may Allah have mercy on him) said: If someone were to ask: does that include the grandfather, i.e., if he has grandchildren, does he have to treat them equitably (in terms of giving gifts)?
The answer is: what appears to be the case is that it is not obligatory, because the strength of the connection between father and child is stronger than that between grandfather and grandchildren. But if there is the fear that ties of kinship may be severed (as a result of not being equitable), then he should take care to give in secret to those to whom he to whom he does give gifts.
End quote from ash-Sharh al-Mumti, 11/84
Based on that, there is nothing wrong with a grandfather singling out one of his grandchildren to give a gift to, to the exclusion of the others.
However, it would have been better and preferable to be equitable in giving to grandchildren, so as to avoid any problems.
That is on condition that giving to his grandson is not a trick to increase the share of one of his children. Please see the answer to question no. 153385
And Allah knows best.
Reproduced from Islam QA