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Blogs from July, 2023

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Estate planning is necessary to ensure your loved ones are well provided for after your passing. The situation can become more complex when it comes to bequeathing assets to minors, as they do not have the legal authority to manage assets. It’s important to take proper considerations into account when including children in your estate plan, as well as the various strategies available to safeguard their best interests and secure their financial future.

RELATED: 5 Costly Estate Planning Mistakes to Avoid

Here is what to consider when bequeathing assets to minors in your estate planning.

Establishing a Trust

Creating a trust is an effective option to protect the assets of minors. A trust allows you to appoint a trustee responsible for managing the assets on behalf of the minor until they reach a predetermined age or meet certain conditions. A Revocable Living Trust keeps assets in your ownership, and only transfers to your beneficiaries upon your death. With a Trust, you specify terms to suit your wishes and meet your beneficiaries' needs, including setting up a distribution timeline, or planning for health and living expenses.

Custodial Accounts

One of the primary concerns when bequeathing assets to minors is the age at which they will gain control over their inheritance. In most states, the age at which minors can receive inheritance - called the age of majority - is 18, including Texas. You can leave your assets to your children or other minors before they turn 18, but if you pass away while they are still under the age of majority, they will need a custodian to manage those assets. One way to set this up is through custodial accounts, such as the Uniform Transfers to Minors Act (UTMA) or Uniform Gifts to Minors Act (UGMA) accounts. Your custodian will have the legal authority to make decisions about the assets until the minors come of age and can make appropriate decisions about their inheritance.

While custodial accounts offer a simpler alternative to trusts, they have some limitations. For instance, once the minor reaches the age of majority, they gain complete control over the assets, regardless of their financial maturity. Additionally, custodial accounts may have an impact on the minor's eligibility for financial aid when applying for college.

Conservator Guardianship

In cases where you don’t appoint a custodian, the court will appoint a conservator to manage the assets. While this option involves court supervision and added expenses, it is required if minors don’t have a designated custodian.

Speak with an Estate Planning Attorney

Managing your estate can be overwhelming, especially when considering your children's and other minors' well-being. When starting your estate planning it is best to contact an experienced attorney to help you make the right decisions for your and your family’s future. The team at Crain & Wooley has years of experience helping families plan for the unexpected and prepare strong legal strategies for their future.

Contact us at (972) 945-1610 and visit us online to learn what we can do for you.

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