Did you know the only way to leave assets to a minor is through a trust? Otherwise, the assets can create a tangled mess for heirs. A recent article from yahoo! finance, “Can I Name a Minor as a Beneficiary?” explains how to address this fairly common issue. In the article we will include tips for adult heirs and also minors.
Planning for Adult Heirs
Property and estate laws are all state specific, with each state having its own laws for property rights, insurance, and estate laws. Even the age at which a person becomes a legal adult varies by state. A local estate planning attorney will be needed to ensure that your wishes comply with your state’s laws.
Four primary documents are used to name a beneficiary:
How to Include a Minor Child
Legal minors are children who have not yet reached their state’s age of majority. Most states set the age of majority at 18, although a handful of states use ages 19 or 21 when a child becomes a legal adult. Legal minors may not take legally binding actions, including signing enforceable contracts or participating in financial transactions. They also may not inherit directly through a will or receive assets through a life insurance policy or retirement account.
However, minors may be beneficiaries of a trust, since the trust’s beneficiaries do not participate in contractual or financial transactions. The trustee manages the assets in the trust and distributes them per the trust’s terms. This can range from making college tuition payments or sending assets to the beneficiary in a simple property transfer.
Most people expect that their children won’t inherit from a will or a life insurance policy for many years,.However, what happens if the parent dies while the child is still underage? If this happens, the assets are distributed to an entity that can legally receive the property and hold it on the minor’s behalf until they reach the age of majority.
There are typically three scenarios:
Leaving the distribution of assets to a beneficiary without proper planning could place a minor’s financial well-being at risk. A court-appointed custodian is probably the last way any parent wants their child to receive assets. Parents with minor children are advised to meet with an estate planning attorney to ensure that their children are protected should unexpected events occur, such as the death of one or both parents while the child is not yet of legal age.
At Vick Law, P.C., we understand the importance of careful planning when it comes to leaving assets to minors. Our experienced team can provide guidance and help you navigate the complexities of choosing the best approach for your specific situation. With our assistance, you can ensure that your assets are managed responsibly and that the best interests of the minor are protected. Contact Vick Law, P.C. today to discuss your estate planning needs and create a plan that secures a bright future for your loved ones.
Reference: yahoo! finance (June 19, 2023) “Can I Name a Minor as a Beneficiary?”