One issue you may run into as you make your estate plan is that you have beneficiaries who are under 18. Maybe you’re thinking about leaving financial assets to your grandchildren. You know that they can use the money to pay for their college education a decade from now. But can they actually inherit at this age?
Generally speaking, the answer is no. Someone who is a minor cannot inherit property or financial assets. But that doesn’t mean you should not include your grandchildren in your estate plan. You simply need to know how to do it.
Using a trust
For example, one way to address this is by putting the assets into a trust. The beneficiary cannot inherit, but the trust can hold those assets for them. It may be as simple as setting it up so that they gain access to the financial account at age 18. The trust just delays that distribution.
In fact, you can also use a trust to delay distributions even beyond 18. Some people will draft the paperwork so that the beneficiary gets their inheritance in stages, such as at 20, 25 and 35 years old. This may be beneficial if you think that the beneficiary will make better choices about how to use the money at 30 than they would at 18.
Finally, a trust can give you a chance to specify how you want the money to be used. You could say that the beneficiary must use the funds to pay for college education, for instance.
Setting up your plan
As you can see, estate planning can be fairly complex. It’s important to understand all the options and legal tools you have at your disposal.
