If you wish to leave assets to your minor children or grandchildren, it is vital that you consult a qualified estate planning attorney to determine the most effective way to structure this inheritance. Poor planning can create unnecessary headaches and put the future financial security of your heirs at risk.
The Problem With Relying on Your Will to Leave a Minor an Inheritance
It’s a common assumption that naming a guardian for a child allows the guardian to control the child’s inheritance. However, this is not the case. When assets are left to a minor, the court will control the inheritance until the child turns 18. Then, the court distributes the inheritance in one lump sum—which can be problematic if a teenager is suddenly in possession of a large sum they lack the maturity to properly manage.
Why Trusts Are a Better Choice
Setting up a trust for your child or grandchild allows you to name a trustee who you feel confident will manage the funds appropriately. This could be the minor’s guardian or a third party, depending on your needs. If desired, the trust can be written to allow the beneficiary to assume full control of the assets or act as co-trustee once they reach a certain age.
A trust is the best option for leaving an inheritance to a minor because it gives you the ability to determine when the beneficiary receives assets and how the assets can be spent. This allows you to earmark funds for postsecondary education, the purchase of a first home, and other important milestones. You can also stagger distributions to eliminate the wasteful spending that can occur when a beneficiary inherits one large lump sum.
Providing for Children With Special Needs
If you are worried about providing for a minor with a physical or mental disability, a special needs trust can protect an inheritance without jeopardizing valuable government benefits. This type of trust allows you to ensure your special needs heir will continue to enjoy the highest possible quality of life.
Do You Need To Speak With A Lawyer About Estate Planning?
If you need to speak with an experienced estate planning lawyer please contact us online or call our Virginia Beach office directly at 757.490.3500 to schedule your free consultation. We have offices throughout Virginia including Chesapeake, Newport News, Norfolk and Suffolk.