Leaving an Inheritance for Children
When you leave money or property for a child to inherit, arrange for someone to manage it.
Providing for your children in case you die prematurely takes more than picking someone to raise them (for more information, see Guardianship for Your Children). You should also consider what will happen to any money or property your children inherit from you. Who will manage it for them until they became adults? You can leave these instructions in your will or living trust.
Many parents don't leave money directly to their children. Instead, they leave everything to each other, with the understanding that the survivor will care for the children. They name their children as alternate beneficiaries. Many single parents, however, leave property directly to their children.
Either way, you should arrange for someone to manage whatever property they may inherit, in case they receive it while they're still too young to manage it themselves. You can take care of this in your will or living trust.
What Happens Without Property Management
If you don't arrange for property management for young children (under 18), the probate court will do it for you by appointing someone to serve as the children's "property guardian." The court often appoints the other parent -- but not in every case.
This arrangement comes with some headaches. Usually, a court-appointed guardian must make frequent reports to the court and has limited authority to decide how the property should be managed. There's one exception: If relatively small amounts of property are involved, many states allow an executor to appoint a custodian under the Uniform Transfers to Minors Act (discussed below) to manage the property.
If your children are 18 or older when they inherit from you, they'll have complete control of the property unless you specify otherwise in your will or living trust.
Options for Property Management
Fortunately, it's easy to avoid the uncertainties and hassles of court-appointed guardianship, or the worry that a 20-something beneficiary may not manage an inheritance wisely. You can choose someone, now, to manage any property that your minor or young adult children may someday inherit from you. There are lots of ways to structure this arrangement. Here are four of the simplest and most useful.
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