How are inheritances left to minors handled upon a parent’s death?
In creating a will, certain legal steps must be taken to leave money or other assets to minor children and ensure they receive the inheritance.
Parents never want to think about what will happen if they die while their children are still under age, but death is inconvenient and can happen at any time. For parents who will be leaving their children a considerable inheritance, special considerations are required.
Options for managing a minor’s inheritance
According to Inc., the court may step in if a parent does not leave specific instructions in a will regarding inheritances left to minors. Because children under the age of 18 cannot own property, if a parent is leaving physical property, it is especially important to make arrangements for what will happen upon his or her death. A parent can set up management of the inheritance in his or her will in a couple ways.
A trust allows a person to say at what age the minor can receive the inheritance. It will name a trustee who manages the property until the child takes ownership. Parents can also appoint certain rights to the trustee to use the inheritance for the care of the child.
The Uniform Transfers to Minors Act can be referenced in a will to appoint a custodian for the inheritance, which grants a person the rights to manage an inheritance but limits what he or she can do with it. The rights of the custodian are set out under the UTMA.
Using a guardianship
The state requires a parent to name a guardian for any minor children who will inherit property worth more than $10,000 upon the parent’s death, according to the New York State Unified Court System. If a parent does not name a guardian for the child, the court steps in and does so. The guardian is given rights over the child and his or her inheritance. The court also maintains joint control to prevent misuse of the inheritance.
Typically, a guardian is the child’s other parent or a close relative. However, a person has the right to name any guardian in his or her will, which is often preferred because it ensures a trusted individual will be managing the inheritance. If the court does appoint a guardian, then the surviving parent along with the child if he or she is over the age of 14 must consent. It is also important to note that even with a will, a judge must approve any guardianship.
For a person concerned about leaving a minor child an inheritance, the best course of action is to set up stipulations in a will. Leaving instructions in a will are most likely to ensure wishes are carried out. Parents may want to consult with an attorney to ensure wills are legally binding and include all the proper language.