We all want to have the peace of mind that our minor children will be taken care of when something happens to us. Aunts, uncles, grandparents, and other family members may want to leave some of their property to minor children as well. But there is a big difference between good intentions and a solid estate plan.
Oftentimes parents believe that naming a guardian for their minor children in their Last Will and Testament (“Will”) will automatically allow the guardian to access the inheritance for their children. However, that is not the case. During the probate process, when it comes to a simple will, the court will typically appoint the guardian named in the will to care for the minor child. But, the court will retain control of the inheritance until the child turns 18, not the guardian. Once the minor child turns 18, then the court has to distribute the full amount to the child.
Usually if the court retains control of the inheritance, the court will have to appoint a guardian to manage the minor child’s inheritance. The process takes time and involves court expenses which are paid from the minor child’s inheritance. An attorney will have to represent the child and attorney’s fees will also be paid from the inheritance.
Many times a minor child will inherit stocks, CDs, real estate, money or other investments from family members. If the amount left to the minor child is greater than $15,000.00, then the court must be involved. The main reason is because minor children can be on title, but they are not allowed to do business in their own name. Thus, whenever the owner’s signature is needed to refinance, sell, or conduct other business, the court will be involved to safeguard the minor’s interests.
A Better Option
The best way to protect your minor child’s inheritance from irresponsible spending, creditors, and the court system is to create a children’s trust in a parents’ Last Will and Testament or a parents’ Living Trust. The person that you designate, not the court, will be able to administer your minor child’s inheritance at the age you would like for them to inherit. The minor child’s needs can be met based on their unique situation through the guidelines you set in the trust.