How to Protect a Minor's Inheritance

Estate plans can oftentimes include provisions that give minors a share of the inheritance. Leaving significant money to an underage person comes with its own set of concerns, including how to ensure that the child will benefit from the money or that they will not squander the money as soon as they are able to access the inheritance.

Leaving a Minor Inheritance in an Estate

The concerns that a person may have about leaving money to a minor can be addressed with a little bit of estate planning. Two ways that an inheritance can be protected in the benefit of a minor is through the development of:

• A custodial account that is under the control of a trusted third-party, or
• A trust that develops rules and stipulations in order to access the inheritance.

A custodial account is a good option if the biggest concern is protecting the assets until the minor is legally allowed to have full access to their finances. A trust is a better option if further protections need to be enacted in order for the inheritance to be granted.

Protections in a trust may be age related or behavior related. A trust that focuses on age may determine that the minor will practice greater financial responsibility as they get older, so only small amounts will be distributed until the person reaches a certain age. A trust that provides rules on behavior may stipulate that a person will only access their trust if they complete four years of college or maintain a certain grade point average. Trusts also have some government and tax exceptions that can be used to the minor's benefit.

Any concerns about granting inheritance to a minor should be addressed with an experienced probate attorney. An attorney can help draft the specific goals of the document and ensure that the minor is as financially protected as they need to be.