When leaving money to children, it’s important to make sure that they are not minors so that they can receive the money seamlessly. If they are minors, whatever is left to them from the estate is going to go through court. The court will then create a conservatorship, which functions like a court-created trust. This conservatorship will entail that a stranger, who is a professional, will take charge of the money or hold it until the child reaches legal age.
So essentially, a stranger is going to be controlling the childrens’ inheritance until they are old enough to receive and manage it. This is not very ideal for parents. But luckily, there is something that can be done to prevent it.
What You Can Do to Avoid Conservatorship
If a person has their kids or grandkids as their beneficiaries and they want to avoid conservatorship, what they can do is to have a will or a revocable trust document. In these estate planning documents, they should indicate the assets that will go to their beneficiaries and add a condition that they should receive it when they reach a certain age.
For example, a statement in a will or revocable trust document can say “I give all my money to my children, but they have to be a certain age.” The person writing the documents can dictate at what age the kids should receive the money, whether 18, 21, 25, 45, or even 80.
Further, the person writing the document should also indicate what happens to the assets while the children haven’t reached the indicated age. They can appoint a manager or trustee of their choosing who will handle the money until the children reach the indicated age.
The trustee can keep the money and use it for healthcare, college, or invest it as they please. But they should be able to return the money when the children reach the indicated age. At this point, the trust closes and the money goes to the beneficiary.
What Happens If This is Not Done?
Without these provisions in a will or revocable trust document, the inheritance is going to be held until the children reach the legal age. This is because minors cannot enter into contracts, and hence will be unable to withdraw the money. The only way to get the money while the children are minors is to go to court and create a conservatorship.
The judge will appoint a conservator, who is a person who does these sorts of things professionally. The conservator is going to be a stranger and not a family member or loved one. If the money goes into conservatorship, there is no control as to who manages the children’s inheritance before they reach the legal age.
This is why people need to be proactive and set up the provisions in their will or revocable trust documents. That way, they can control what happens to the inheritance while the children are still minors.