It’s very common to want to include minors in your estate plan. Perhaps you’re writing a will in your 60s, for example, and you have grandchildren who are under the age of 18. You want to leave financial assets to these grandchildren, but you know you might pass away before they become legal adults.
If so, it’s important to note that minor beneficiaries generally cannot directly inherit assets. They’re not allowed to take control of the financial assets you leave them. This doesn’t mean you should exclude them from your estate plan or that there is no way to pass assets on to this part of your family—it just means you need to plan in advance to determine how it will be done.
Setting up a trust
One way to address this is by creating a trust. When you pass away, the minor is the beneficiary of that trust, but it is the trust that technically owns the assets. The trust can then hold those assets until the grandchild turns 18. This may be as simple as stipulating that they can access the account and make withdrawals after their 18th birthday.
One of the benefits of a trust, however, is that you can give more specific instructions. For example, you could delay payments until they are 25 or 35. You could leave instructions requiring that the money be used for a college education. Using a trust gives you significant control over what happens to the inheritance.
This highlights why it’s so important to understand all of your estate planning options and to address these complex situations well in advance.