Can you imagine receiving a few hundred thousand dollars in your account when you were 18 years of age? Typically, parents wish to leave their assets to their children or grandchildren. Although many people simply leave their assets to their children and grandchildren outright, a recent article discussed why it might be best to leave gifts to minor children and grandchildren in trust accounts.
If a parent leaves an inheritance to a minor child outright, the inheritance must go through the process of probate. Because a minor cannot legally hold property in his or her own name, a probate judge must appoint a guardian to hold the property until the child reaches the age of 18. The court-appointed guardian may not be a person that the parent or grandparent would have chosen. Moreover, the cost of compensating the guardian may diminish the inheritance.
Creating a trust for your minor child is the only way to remain in control of the assets. Through the trust, you can dictate how the funds may be used, and when they may be distributed to the beneficiary. Moreover, through creation of the trust you can select a trustworthy person to serve as trustee. Finally, a trust will take effect immediately. Therefore, the beneficiary will not be forced to submit to the probate proceedings.