Most people want to leave an inheritance for their children and grandchildren. In some cases, parents may choose to skip a generation and leave their assets and money directly to the grandchildren. This is usually done by designating the grandchildren as beneficiaries in a will. 

Leaving assets to minors under the age of 18 can also be done by naming them the beneficiaries on specific accounts, which include:

• IRA accounts
• Bank accounts
• Retirement funds
• Insurance policies 

What Are The Pitfalls Of Leaving Assets To Minors?

Minors are not allowed to own assets. If you designate a minor as a beneficiary, there is a guarantee that there will be a court proceeding after your death. The judge will appoint a lawyer to represent the minor child who is designated as a beneficiary. Each lawyer is paid from the dollar value of the assets going to the minor child they represent. 

Probate court can be a time-consuming and expensive process. It is always helpful to try to avoid probate. When the children turn 18, they will receive their inheritance in a lump sum. Moreover, a high school student receiving a check based on the size of your estate can be an opportunity to grow up and fulfill dreams or to make non-ideal decisions.

How To Properly Leave Assets To Minor Children?

One of the best ways to leave money to minors is by using a trust, in which minors are named as beneficiaries. Trusts avoid probate and make sure your wishes are followed. In the long run, it saves you time and effort. You can adjust distributions in stages instead of releasing assets in one lump sum. When you make the trust, you appoint trustees who will manage the money for the minors until they reach an age that you specify - it can be 25 or even 35. 

Once the minor children are of age, the assets become theirs to spend, or be released according to your specifications. Before this, the trustees can be directed to use the trust to pay for health care, education, and other items of support of their choice. Even modest estates can benefit from creating a trust. The size of your bank account does not determine if a trust is useful. 

Setting up your estate correctly helps ensure that your children and grandchildren will receive even more assets and money instead of it going through probate and legal fees after you pass away. If there is a lot of money or property to pass on, making a trust may be the preferable way to leave assets to minors.

Takeaway

When you consider leaving assets to minor children, your main priority should be to ensure that the assets are used for your care. Estate planning is a task that no one wants to face, but once it is done, you will enjoy peace of mind knowing that your family, including your minor children, will be given the assets after your death. 

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