Back to the Basics – Trusts for Minors

By: Matthew F. Penater, Esq., Partner – Elville and Associates,, 443-393-7696
The first time most people think about getting a Will is when they have their first child. The common thought is “Who will raise our kids should both parents pass away?” This is a legitimate and serious concern. Naming a person or persons to serve as Guardian of your minor (under 18) children is of paramount importance. However, arguably the second most important consideration is what happens to your children’s inheritance should both parents pass away? This issue tends to be glossed over by parents who are not aware of the risks posed by leaving an inheritance to a minor child.

Generally, if a minor child is a beneficiary under a parent’s Will, life insurance policy, or other beneficial interest, then a Guardianship of the child’s property needs to be put in place. Establishing a Guardianship of the property requires a Court proceeding. In addition, whomever is named the property Guardian needs to file annual accountings to the Court. When that child turns 18 years old, the child inherits the entire amount, outright and free of any oversight. I don’t know about you, but if I received a $50,000 check at the age of 18, it would have been gone by the time I was 21. There is a simple solution to this problem. Instead of leaving your assets to your children outright in a Will or life insurance beneficiary designation, leave it to a Trust for your children’s benefit. You will name a person or trust company to oversee the inheritance and use it for your children’s benefit (ex. education, health, and support), while at the same time, ensuring the assets are safely invested so the assets can grow over time. You can structure the Trust for your children however you think is best: for example, you can have the Trust distributed to your children in thirds at ages 25, 30, and 35.

Leaving assets in Trust for your children: 1) prevents the need for a Guardianship of the property; 2) protects your children from themselves by ensuring they do not receive everything at age 18; and 3) ensures the assets will be used for their benefit in a measured way while also seeking some growth in the assets for eventual distribution to the children.

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