1. Your grandfather is going to buy himself a pistol from an FFL, it is for him, he is using his money, and it's not intended for anyone else.
2. At some point after that, you will get a PPP from your local sheriff
3. You will then make your grandfather an offer to buy the gun since he doesn't really like it anyway
You are both now covered. I believe all the gun docs an FFL makes you sign basically state you are not buying the gun for someone else, it is for your use.