Leaving an inheritance to underage heirs can be a complicated and delicate issue. While leaving an inheritance to a minor is possible, you need to surmount some tricky hurdles. With legal requirements and potential pitfalls to overcome, it’s essential to approach the matter with careful consideration and proper knowledge.
Here are some legal mechanisms that can be used to leave assets to a minor.
List your children as beneficiaries
Regardless of their age, you should list your children as beneficiaries in your life insurance, retirement policies, trusts, will and other relevant accounts. By naming your children as beneficiaries, you may be able to leave specific assets to them.
Establishing a trust
Setting up a trust can help you control the distribution of your estate to your beneficiaries. A trust is a legal entity that holds and manages assets for beneficiaries. The trustee manages assets and distributes them to beneficiaries according to the terms of the trust. The trustee can be instructed to distribute the assets in a specific manner or transfer them to a beneficiary once they reach a certain age.
Setting up a custodial account
A custodial account is a financial account established for a minor’s benefit. The account is managed by a custodian, who is responsible for managing the account until the minor reaches a certain age. Once the minor reaches the age of majority, they will have complete control over the account and its assets.
Naming a property guardian
It is possible to name a guardian for the minor in your will. A property guardian is someone who is appointed to take care of the minor and manage the inheritance you leave behind. Your child will then be able to manage the property once they turn 18.
Leaving an inheritance to an underage heir differs from leaving an inheritance to an adult. Creating and maintaining a well-designed estate plan may help you leave an inheritance to an underage heir.