As a parent, leaving a lasting legacy for your child is likely your top priority. Often, this is achievable through careful estate planning. But can a young child inherit assets from a will, and what are the implications?
The law aims to protect your estate and your child’s welfare
In California, as in many states, minors cannot directly inherit assets until they reach the age of majority (18 years old). This restriction protects children’s interests and prevents potential mismanagement of their inheritance.
You have other legal avenues to ensure your assets benefit your children
While minors cannot legally own property, this does not mean you cannot include your young children in your will. Consider the following options:
- Establish a trust: This allows you to set specific terms for asset distribution and management.
- Name a guardian: Choose someone responsible to care for your children and manage their inheritance.
- Designate a custodian: You can appoint someone to manage assets for your child until they reach a specified age. This action is allowable under the Uniform Transfers to Minors Act (UTMA).
- Consider a testamentary trust: This type of trust is created through your will and takes effect after your death.
Each option has its own legal implications and requirements. For example, in California, the California Uniform Transfers to Minors Act allows parents to transfer assets to a custodian for their child’s benefit until the child reaches 18 or 21 years old, depending on the type of transfer.
When creating your will, you must also consider potential tax implications and how they might affect your child’s inheritance. Estate, inheritance and gift taxes can all play a role in determining the most effective way to leave assets to your children.
Remember, leaving a legacy for your child involves more than just listing their name in your will. Taking the time to consult with an attorney and create a comprehensive plan ensures their financial security and well-being in the future. Your peace of mind is worth the investment.