How to Leave an Inheritance for Your Minor Children
How to Leave an Inheritance for Your Minor Children
Since you do not know what age your children will be when you pass away, it is best to plan their inheritance as if they have not reached adulthood at that time. You can always update your plan after your children are grown. There are several ways to leave an inheritance for your minor children.
Restricted Account
If the inheritance you wish to leave is small, a restricted account may be best. The funds in this account can be used by a custodian or guardian to pay your child's living expenses until he or she reaches adulthood. At that time, your child will inherit what is left of the restricted account funds. If the inheritance is large, you may not want to use this type of account if you feel your child will not be able to manage the inheritance responsibly in early adulthood. Accounts of this type are generally created under the Uniform Transfer to Minors Act (UTMA) in Washington and many other States.
Staggered Trust
If you are worried that your child will mismanage a large inheritance, you may wish to use a Trust to bequeath funds and property. You can choose to have the trust pay out a lump sum at specific milestones in life.
The downside to this type of trust is the cost to run it, including paying your chosen trustee. If your child's inheritance is not very large, the trust maintenance costs may eat away at the funds quickly. With this type of trust, the lump sum payments, once dispersed, are no longer protected from your child's creditors.
Lifetime Trust
Another trust option, especially popular with larger legacies, is a lifetime trust. While your child is a minor, a chosen trustee will manage the trust. You can stipulate an age for your child to take over as trustee.
The benefit of a lifetime trust is that you can use it as a generation skipping trust, or you can even specify a person or charity to receive what remains of the trust upon the death of your beneficiary. With a lifetime trust, as long as items remain in the trust, they are protected from your child's creditors and from divorce settlements. Like other types of trusts, a lifetime trust may cost quite a bit to run. Svan of Sweden – Using European Methods to Produce Great Products for Kids WePlay – Offering the Best Institutional Quality Values for Kids and their Parents Childhood In Wazirabad Quite An Adventure Children Behavioral Disorders Teenage Makeup Ideas Diary of a Wimpy Kid 2 Rodrick Rules Easy Ways to Teach Your Kids about the Importance of Earth Day A Trip to the Theatre Creates an Engaging Experience for Children What Are The Factors In Child Anger? – How To Deal With Child Behavior Problems Kids' Toy Storage Boxes – Popular Picks For Kids Let Your Children Enjoy College the Right Way Popular Demand For Kids Wear Rich Presta Self Help Products: Panic Puzzle, Anxiety Free Child Program, Emetophobia and Paruresis