We depend on our families for stability, support, and love. Family structures come in a wide variety of shapes and sizes and it is not uncommon for aunts and uncles to want to help provide a solid financial future for their nieces and nephews. When drafting your last will and testament, you may consider, for example, leaving your home to your infant niece. However, this may not be possible. You need to understand the laws surrounding leaving property to a minor.
The first thing you will need to understand is that the law prevents a minor from inheriting property in his or her own name. Instead, an adult will have to be the one to hold on to and manage the property on the child’s behalf until the child turns eighteen. That does not mean, however, that it is impossible to remember your niece in your will. You can name her as a beneficiary of your estate, you should also name a trustee, however, to take care of the property. A trustee will be responsible for managing the property in accordance with the instructions in your will or trust documents. For example, you can leave your savings account to your niece with instructions to the trustee that the funds will only be disbursed to help with educational expenses.
As an alternative to leaving assets to your niece in your last will and testament, you may also want to consider making a trust. A trust has several benefits, including passing the property outside of your estate. This means your niece will benefit from the assets in the trust quicker and without having to wait for the assets to pass through probate. It can also allow you to shield your assets from creditors. You can structure the trust to meet your niece’s needs. For example, you can provide that the trust will exist until your niece turns twenty-five. At that time, the trust would dissolve and your niece would receive outright the assets that still remain.
Leaving a gift outright to a minor child will require that the assets pass under the Uniform Transfer to Minors Act. This law provides that when a minor is named in a will, a special account is set up for the child. The assets are placed in that account, and the account will terminate at the time you specify in your will, but cannot last after the child turns twenty-one.
We have extensive experience helping our clients choose the right estate planning tools to meet their goals. Call us today at 651-371-9117 to talk about your future.