It is reasonable to want to provide for your children or grandchildren as you begin the process of estate planning. However, good intentions and poor execution can leave your next of kin not getting the full amount of what they deserve. These unintended results can be expensive and time-consuming for them and surrounding family members, so if you want to pass down an inheritance to family members considered minors, here is the best way to do it.
Why a Last Will Is Not Enough
Don’t make the initial mistake of relying purely on a last will and testament. While this is an extremely important document to have written up, it might still have some flaws within the court system if you pass down an inheritance to a minor.
A last will is probated and goes through the court system. Throughout this process, the minor will be under the guardianship of the individual you designated in your last will. However, if the inheritance were listed to be bestowed to the minor, this would be controlled by the court, not the appointed guardian. The court will hold onto the inheritance until the legal age, primarily 18, and then the entire inheritance will be passed down when the minor turns of age.
The mix of loss of control and the inheritance being passed down very early in the child’s life could go against what you might wish to happen. Simply writing the inheritance down in a last will is insufficient to ensure control.
Trust a Trust to Pass Down Your Inheritance
The best way to pass down an inheritance to a minor is through a trust account. This will allow you to appoint someone of your choice to manage the inheritance before the minor is able to obtain it, cutting out the court system entirely.
You can also decide when the inheritance will be handed down to the minor. Instead of right when they turn 18, you can write in stipulations such as that they must be 20 or 25 and that the inheritance must be used toward specific things such as a college education or a down payment on a house. You would be unable to write these clauses otherwise. A trust allows you to control where your inheritance goes and when.
Choose a Revocable Trust
To get more specific, choose a revocable trust to pass down your inheritance. This allows the person of your choice to manage the inheritance until the minor turns of age or meets the required clauses you set in place. Additionally, you continue to have the opportunity to edit or change things throughout your lifetime.
A revocable trust also protects the inheritance from the courts, creditors, irresponsible spenders, or those who wish to have the inheritance themselves. You can better protect it during and after your lifetime.
Passing down inheritance can look different for everyone. If you have questions, send me a message or contact the team at Hartmann Law.