How Can Assets Be Left to Minors?
3 Basic Techniques For Wills
Estate Planning Attorneys in Thousand Oaks
You can leave assets for a minor to a designated guardian, who will be confirmed by the court to hold assets for the health, education, support, maintenance and general welfare of the child until the child becomes an adult (age 18 in California). At age 18, the guardianship is terminated by the court and the guardian transfers title to the assets to the child, The child, is now the owner of the assets and can do with them as he or she pleases. (A frightening thought to many!)
If you believe age 18 is too young for distribution to the child, another way assets can be left to minors is to provide for the assets to be held by a person you designate as a custodian for the child. The custodian acts in the same capacity as the guardian, explained above, except you provide for the one time distribution to take place at an age between 18 and 25. For instance, you could leave all or a portion of your estate to “Mary Magnificent as Custodian under the Uniform Transfer to Minors Act until age 23.” This language will cause the assets to be used for your child’s welfare under the supervision of your trusted friend, who won’t distribute the assets remaining until your child reaches age 23. (Custodianship may achieve a more comforting result for some parents who believe the child will be more mature and better equipped to handle the distribution of assets.)
For those of you who believe age 25 is still too young for outright distribution of an entire inheritance, or who desire to make more than one distribution, the creation of a testamentary trust in your will may be the answer so assets can be left to minors. A testamentary trust in a will is a trust arrangement that begins at the time of death. All or a portion of your estate can be directed to be housed in a trust and managed and distributed in accordance with your wishes. For example, at the death of an individual or a husband and wife, assets can be placed into a trust in equal shares for the benefit of the children. The assets will be used for the health, education, support and maintenance of the child and perhaps one-third of the trust assets will be distributed to the child when the child reaches 25, another one-third at age 30 and the remainder at age 35. This trust arrangement only permits distribution at ages desired by you (allowing for maturity to occur before placing assets into a child’s hands) and directs multiple distributions (here, 3 strikes), so if the first distribution is blown, the beneficiary was prevented from blowing the entire inheritance and had to wait another 5 years before the next distribution.