By Elizabeth A. Caruso, Esq.
I am continuing my focus from last couple of months on reasons why you may want to have a trust. This month’s focus will be on planning for the minors in your life. These can be children, grandchildren, nieces, nephews, or anyone under the age of 18. We will tackle why a trust helps with vacation homes next month.
There are many situations where a minor may become a beneficiary under your estate plan. You could decide to include them from the very beginning, or they may inherit because you had another loved one who predeceased and they inherited their parent’s share. Regardless of how a minor comes to be a beneficiary under your estate plan, you want to make sure that the proper mechanisms are in place to keep their inheritance out of the probate court.
When including a minor in your estate plan, you want to be specific as to how they will inherit the funds, how those funds will be used, and at what age they will be able to manage their own funds, if at all. Being specific as to how they will inherit means whether the minor will inherit directly through the trust, by receiving a specific distribution or percentage, or if the minor will only inherit if someone else, usually a parent, predeceases them.
As with any other estate planning you do, you want to be as clear as possible. Once it is determined that the minor will inherit as part of your estate plan, it is important to establish the rules about that inheritance. A minor cannot receive an inheritance outright until they turn 18, but before they turn 18, can the funds be used on their behalf? What can the funds be used for? Education is a very popular approved expense, but what about medical costs or a car? You, as the creator of the estate plan, can define as broadly or as narrowly as you like what is an acceptable expense that inheritance funds can be used for, and it is the trustee’s job to follow your directions.
The last step is establishing when the minor will receive the inheritance outright and free from the rules you established. Many people believe that 18 is too young for someone to be in charge of their own inheritance, even though that is the age of a legal adult. In your estate plan, you can define that age to be whatever you want. The ages of 25 and 30 happen to be popular, but you can do whatever you want with your own plan. Take a look back at last month’s article where I discussed why you may want to keep an inheritance in trust for someone’s life.
An elder law attorney can help you to create a trust that is set up with the necessary language to make sure that any minors who inherit under your estate plan do so properly and within the boundaries you have set. If you already have a trust and you don’t know if it contains these aspects, an elder law attorney can review it and advise you.
About the Author: Elizabeth A. Caruso, Esq. is an attorney at Legacy Legal Planning, LLC, in Norwell. She has been practicing estate planning, probate, and elder law on the South Shore for more than a decade. If this article has sparked questions for you, please feel free to reach out via phone 781-971-5900 or email elizabeth@legacylegalplanning.com to schedule a time to discuss your unique situation.
