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Yes, you can name a child in a will as an inheritor, but there is another step that must be taken. A minor cannot directly manage property, so you would name a guardian of property in the will.
The guardian would have a fiduciary responsibility to manage the assets responsibly on behalf of the child. This person or another individual that you designate would act as the guardian of the person, and they would look after the child on a day-to-day basis.
If you do not address guardianship in a will, the probate court would be forced to appoint a guardian. This is a necessary safeguard, but the situation would be unnecessarily complicated, and the outcome may not be consistent with your true wishes.
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You could utilize a trust instead of a will to facilitate asset transfers to a minor child, and a revocable living trust would serve as a comprehensive estate planning tool. It would provide for the child if you pass away while they are still minor, but this is not the only advantage.
If you establish a revocable living trust, you would act as the trustee while you are living, so you would maintain control of the assets. You name a successor trustee to assume the role after your death, and your heirs would be the beneficiaries. A minor child could be a beneficiary.
After your death, the trustee would distribute the assets to the adult beneficiaries in accordance with your wishes. The trustee would manage the assets on behalf of a minor child that is a beneficiary of the trust.
There is another type of trust called a testamentary trust that can be used as an alternative. This is a trust that is contained within a will, and it would be created after your death. The trustee that you name would administer the trust, and the child that is receiving the inheritance would be the beneficiary.
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Absolutely, and this is a great way to make sure that your family is provided for if you pass away before your time. A lot of younger adults say that they do not have estate plans because they don’t have significant resources, but term life is very affordable, so this is not a valid excuse.
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This acronym stands for the Uniform Transfers to Minors Act, and it has in large part replaced its predecessor, the Uniform Gifts to Minors Act (UGTMA). These legislative measures allow for the creation of custodial accounts for minor children.
The UGMA was established in 1956 and it was updated 10 years later, and the Uniform Transfers to Minors Act came along in 1986.
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A UGMA account can hold investment instruments like cash, stocks, bonds, insurance policies, annuities, and mutual funds.
All of the same types of investments can be held by a UTMA account, but the account can also contain real estate, collectibles, and other types of property.
If you set up a custodial account, someone that you name would act as the custodian until the child reaches the age of majority. The child would assume ownership of the funds when they are adults in the eyes in the law, and they could use the resources for any purpose.
We practice in Vermont, and our state is one of just two states that does not allow UTMA accounts, but UGMA accounts are permitted. For your information, South Carolina is the other state that has not expanded the investment options.
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As you can see, there are multiple tools in the estate planning toolkit, so there is an ideal way to approach any situation. Personalized attention is the key to a properly constructed plan, and this is what you will receive when you choose our firm.
You can schedule an appointment at our Essex Junction, Vermont estate planning office if you call us at 802-879-7133, and you can use our contact form to send us a message.
