When it comes to estate planning, many parents assume that naming their children as beneficiaries is enough. But if those children are still minors, that decision can unintentionally create complications. Courts generally do not allow minors to inherit assets directly, which means additional steps must be taken to ensure a smooth transition of your legacy—without unnecessary delays, expenses, or court oversight.
Here’s what parents and guardians should know when planning to leave assets to minor children:
1. Minors Cannot Inherit Property Directly
If a child under the age of 18 is named as a direct beneficiary—whether in a will, life insurance policy, or retirement account—the court will step in to manage those assets until the child reaches adulthood. This often requires:
- Appointing a court-supervised guardian of the property (not necessarily the same person as the child’s legal guardian),
- Annual reporting requirements,
- Delays in access to funds,
- And in many cases, full distribution of the assets when the child turns 18—whether or not they are ready for that responsibility.
2. Name a Guardian for Your Children
In your will, you should name a personal guardian to care for your children if something happens to you before they reach adulthood. This person will be responsible for raising your children and making decisions about their day-to-day life.
If you do not name a guardian, the court will make that decision for you—possibly appointing someone you would not have chosen.
3. Set Up a Trust for Financial Protection
A trust is one of the best tools available for managing assets on behalf of a minor. Here is how it helps:
- Avoids probate: Assets held in a trust do not have to go through the probate process, meaning they can be accessed more quickly and privately.
- Provides oversight: You choose a trustee to manage the funds and ensure they are used for your child’s benefit, such as education, healthcare, and general support.
- Delays distribution: Instead of handing over a lump sum at age 18, a trust allows you to set age- or milestone-based distributions—like 25% at age 21, 25% at 25, and the rest at 30.
- Flexibility and control: You decide the rules and structure. You can even include provisions for emergencies, incentives, or special needs.
4. Choose the Right Trustee
Think carefully about who should manage the trust. This person or institution should be financially responsible, trustworthy, and able to act in your child’s best interests. You may want to name a trusted family member, a close friend, or a professional fiduciary.
5. Review and Update Your Plan Regularly
Life changes—children grow, relationships shift, and financial circumstances evolve. Review your estate plan regularly to ensure it still aligns with your wishes and your children’s needs.
Ready to get started? TrustCounsel is here to help.
We will work with you to create a plan that protects your children’s future and gives you peace of mind today. Visit our contact page to find the office closest to you or fill out our online form—someone from our team will reach out to schedule a time that works for you.