One aspect of estate planning is providing for the management of an inheritance for your beneficiaries, those who receive inherited property. So what happens when that beneficiary is a minor child?
If the person leaving the inheritance planned properly, there will be an estate planning tool in place to manage the inheritance until the child reaches a certain age. Popular tools that are used for this purpose include:
- Trusts: Leaving the inheritance in a trust allows an appointed trustee to manage the assets until the child reaches a certain age. The trust documents may be very specific regarding the distribution of the trust property or they may leave it up to the trustee to be more discretionary in distributing the property. The trustee does not necessarily need to be a professional, it can be a trusted friend or family member that handles the trustee’s duties.
- Wills: Appointing a custodian or guardian for the inheritance within a will allows you to appoint someone of your choosing to oversee the money or property until the child reaches the age dictated by state law.
If the estate plan does not arrange for management of the inheritance by an adult, a probate court will appoint someone to serve as the guardian of the property for the child.
Working with an estate planning attorney gives you not only the information you need to make decisions regarding your estate and inheritances, but the options that can best work for your situation.