What would happen to your young children should something happen to you? Have you named a guardian in your will? Have you created income streams or designated specific assets to see to their well-being into the future? If you want to leave assets to minor children, you need to plan for it now.
Common Mistakes Parents Make
One of the most common mistakes parents make is to assume that, by naming a guardian for their minor children in their will, the guardian will automatically be granted access to the estate assets to take care of the children. Unfortunately, that's not what happens.
Unless you have your wishes clearly—and legally—outlined, the court will control how your estate is to leave assets to minor children. The guardian isn't the one to control that inheritance. And this control is enforced until the child reaches the age of majority, either 18 or 21.
Upon achieving that magic age, your child will receive the entire inheritance. If you think back to how much sense you had at age 18, you might have some serious reservations about placing a lot of money at your child's disposal.
Legal Requirements for Bequeathing to Minors
When the court is involved in distribution of assets to your children, they will have requirements. Every time your child's guardian wants to use money from the fund, they'll need to document it. Those expenses will then be audited and approved by the court.
In addition, each time money is requested from the estate, an attorney has to be appointed to represent the minor child in court. Naturally, the attorney's fees will be deducted from the funds you've left behind. That can eat away at their inheritance quickly.
If relatives leave assets to minor children, the same rigamarole will occur. The court will step in to protect the child's interests—even when the parents are still alive. This happens when a minor child is named as a direct heir, especially of high-dollar assets.
How to Properly Leave Assets to Minor Children
There has to be a better alternative, right? One option is to create a children's trust as part of your estate plan. In the trust, you will designate a person who will manage how you leave assets to minor children. That takes power back from the court and keeps it with a trusted friend or family member.
Of course, in this scenario, you can still decide when or if your child will inherit, as well as the conditions under which they will do so. Keep in mind, however, that this provision won't go into effect until you die. It will not occur if you are incapacitated.
Revocable Living Trust
Another option—and probably the best—is to create a revocable living trust.
A revocable living trust is extremely flexible and allows you to take each of your children's needs and circumstances into account. You don't parent all of your kids the same, so why would you leave assets to minor children in the same way? Here, you'll appoint a trustee, who will manage the inheritance until your children reach the age you want them to have full access to the funds.
Plus, with a revocable living trust, all of the provisions hold when you are incapacitated as well.
When you choose a smart way to leave assets to minor children, they are protected from the courts, creditors, divorce, and even their own excess. And your revocable trust can be amended at any time. If you have second thoughts about a provision or change your mind about the trustee, making modifications is easy through a trust amendment document. In the unfortunate instance that your child predeceases you, you can also dissolve the entire document.
Poulos Law Firm Helps You Leave Assets to Minor Children
It can be disconcerting to think about dying and leaving your children. But it can be even worse for them to leave them ill prepared for their future should you pass away unexpectedly. Being prepared is the best gift you can leave to your minor children.
At Poulos Law Firm, we help you make plans that protect your children and family. Contact us to schedule a consultation and learn more about how to properly leave assets to minor children.