Child Heirs: Bequeathing to Minors

The biggest estate planning concern for parents is usually protecting their children. However, parents of minor children have different concerns than those with adult children. Of course it's important for parents of minor children to name guardians for their children in a last will, but many parents (and grandparents) also want to leave money or property to minor children and grandchildren.

When will they get the inheritance?

Parents engaged in estate planning must be especially prudent when planning for the future of their minor children. Generally, minor children can inherit under a will or a living trust; however as minors, they cannot legally manage the inheritance. Property guardians or trustees handle the property for them until they reach the age of majority, when they are legally responsible for their actions as adults and can take over the management of their inheritance.

Even after a child reaches the age of majority, benefactors may wish to delay inheritance until the child is older. This can be especially useful if the inheritance includes a large sum of money or real property that must be overseen and maintained.

Many wills contain a testamentary trust provision, which names a trustee to hold and manage the property for a child until a certain condition is met, usually when the child reaches a certain age. The trustee can be the same individual as the guardian.

Similar to a will, a living trust also allows parents to name an individual (trustee) to manage the child's inheritance until a certain condition is met—this is known as a children's subtrust. The difference is that the testamentary trust in a will is effective when the parents are deceased while the children's subtrust in a living trust could take effect prior to death, for instance, upon incapacitation.

What does a guardian do?

There are two kinds of guardians: personal guardians and property guardians (or property managers). A personal guardian is responsible for raising the child and making personal decisions regarding education, religion, manners, culture, etc. A property guardian is responsible for handling money, personal, and real property, including inheritance, owned by the child. Parents can choose to appoint two separate guardians or to appoint one person to serve as both personal and property guardians. The more common approach is for parents to choose one person to serve as both, thereby avoiding the obvious conflicts that may arise by having two people share the legal authority.

In a will, parents can appoint guardians for their minor children. If the parents don't choose guardians, the state will assign them when the parents become incapacitated. It's also a good idea to name successor guardians in the event that the original guardians are unable to fulfill their responsibilities.

One of the most important goals of estate planning is protecting loved ones. For many parents, that means thinking about the physical and financial well-being of minor children.