LEAVING MONEY TO YOUNG CHILDREN
It Is Easy To Leave Money To Young Children
By law, minors cannot receive an inheritance outright. So, what do you do? Let’s assume you want to leave all of your assets equally to your 2 children, Jason age 8, and Kyle age 6. A Revocable Living Trust can say that the assets get divided between Jason and Kyle. It can say Jason and Kyle do not receive an ATM card to their inheritances until they each reach the age of 25, for example. While the money is held, the successor trustee (boss of your Revocable Living Trust) will use the children’s inheritances for Jason and Kyle’s educations, health and best interest until age 25.
What is the alternative?
Let’s say that instead of having a Revocable Living Trust, you name Jason and Kyle as beneficiaries of your million dollar life insurance policy. You die tomorrow. Jason and Kyle cannot receive their inheritances outright because they are minors.
Someone will need to get court-ordered conservatorship of Jason and Kyle’s inheritances until each turns 18. A conservator is a financial babysitter. The conservator will place Jason and Kyle’s inheritances into restricted accounts. Assets in restricted accounts cannot be used to raise the boys without a court order.
On Jason’s 18th birthday, he will receive $500,000 outright. On Kyle’s 18th birhday, he will receive $500,000 outright. Is this really a good idea?