As you make your estate plan, you may decide that you want to leave a significant amount of money to one of your children or grandchildren. The problem is if this person is a minor. You know that the money will be very beneficial for them in the future, as they go to college or create a life for themselves, but can you leave the money to someone who is still legally a child?
If you’re thinking about including them in the will and leaving them that money directly, it won’t work. Someone has to be at least 18 years old – when they qualify as a legal adult – to inherit financial assets. So, putting the inheritance in your will to them directly before they are 18 is not an option. What should you do?
Setting up a trust
Often, the answer is to create a trust in your will. You can then name the younger individual as the beneficiary of the trust. They can’t inherit it directly, but you fund the trust with your own assets, and they can then gain access to them in the future. For instance, you could tell the trustee to use the money to pay for college tuition after the beneficiary graduates from high school.
Additionally, some people decide that even 18 is too young to inherit that much money. If you use a trust, you can set up delays, such as stipulating that the person only gets 10% of the money at 18, but they get the remaining balance when they turn 30.
As you can see, trusts can be very beneficial, but it is important to know how to set them up correctly. Take the time to carefully look into your legal options with one of our Estate Planning attorneys.
