While families are working on their financial plan, saving for retirement, buying a new house, or updating their insurance policies, all too often, estate planning is put on the back burner. Just as life happens, so does death. An unexpected death can result in a situation where the estate plan in place does not apply to the current situation, specifically when the age of the beneficiaries was not considered and minor children inherit money and property.
The Marietta Daily Journal’s article, titled “Using Trusts to Pass Inheritance to Minor Children”, explains that when a minor child inherits money or property, the probate judge will appoint a guardian or conservator to manage their assets. Typically, this property guardian isn’t the child’s parents or legal guardian, as it might been seen as a conflict of interest. One major issue that a property guardian may have to deal with occurs when the child reaches age 18 and receives their inheritance. Most 18-year-olds can’t handle a significant amount of wealth.
When you select a minor child as your beneficiary, consider placing those assets in a trust to keep him or her from spending foolishly. Trusts are simply a vehicle by which a person (the grantor or donor) transfers assets to a beneficiary (or beneficiaries). They receive the assets according to the trust document. A trustee manages the trust assets and enforces the terms of the trust.
Trusts also can transfer assets in installments or at a later date. For example, if an individual is too young or immature to deal with an inheritance. Trust assets can be set up to only be used for the health, education, maintenance and support of the beneficiary until a specified age so that the beneficiary can benefit for some time.
In addition, creating a trust and placing assets in it before death will let families or individuals distribute property without a lengthy probate process. Estate planning attorneys can structure a trust to fit your family situation so that your wishes for the distribution of assets will be carried out efficiently and properly.
Trusts are designed to help families address issues such as reducing estate taxes, avoiding probate court, or transferring assets. To structure a trust for your specific situation, contact an experienced estate planning attorney.
Reference: Marietta Daily Journal (August 14, 2015) “Using Trusts to Pass Inheritance to Minor Children”