When you are designing your estate plan, keep in mind that minor children, those under age 18, cannot inherit. It’s a legal impossibility. If you try to give assets outright to a minor, the court will intervene, name a guardian for the assets, oversee the guardianship, and allow the minor to have the assets at age 18, no matter how large the dollars. This, likely, isn’t what you would want.
If you would like a minor such as your child or grandchild to be a beneficiary of your estate, include provisions in your revocable living trust to pass the assets in trust shares. You will name a trustee (and successor trustees) to manage the assets and make distributions for the minor’s benefit, per your instructions.
Name the child’s trust as the beneficiary of a life insurance, annuities, or retirement accounts that you wish to pass to him or her.
The trust will provide for your beneficiary’s health, education, and maintenance. You can keep the terms of the trust general to allow your trustee to make good decisions at the time or you can include specifics regarding providing something that may be important to you such as college education or travel opportunities.
A life-time trust is the best way to inherit. So, when your minor beneficiary attains the age of 18, keep the trust provisions in your estate plan. At that time, you may want to add the child as a co-trustee, in progressive levels of responsibility, so the child learns about managing money, making investments, and living within his or her means.
Life-time trusts provide asset protection so assets can’t be taken by creditors such as a divorcing spouse, bankruptcy creditor, or car accident creditor. In addition, the trust will include special needs language so if your beneficiary is ever receiving governmental assistance, the inheritance will not disqualify him or her.
If you wish to pass assets to a minor beneficiary, consult with a qualified estate planning attorney.