Using a Children’s Trust and Other Options for Leaving Money to Children
Do you have questions about leaving money to your children or grandchildren? Call 800-929-1725 for an appointment with an estate planning attorney from Wadler, Perches, Hundl & Kerlick. We have five offices in Wharton County, Fort Bend County, and Matagorda County.
In this article, Attorney Philip Hundl answers a question about ways to leave money to children or grandchildren.
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Question: I would like to put my grandchildren, who are minors, as primary beneficiaries of my bank account and/or life insurance policy. How could I do that since they are minors now and could be when there is a disbursement?
Answer: There are several options to achieve your objective without creating the need for court-ordered guardianship, which would be expensive and time-consuming.
Option 1 — Create a Children’s Trust for Your Grandchildren
The first option would be to create a trust for each of the beneficiaries that are minors. In the trust agreement, you would name a trustee for that beneficiary and guidelines for the trustee’s administration of the trust. Under the beneficiary designation, you would name the trustee/minor child’s trust as the beneficiary.
Option 2 — Open an Account with an Adult Listed as Trustee
Another option is to open an account and list an adult as “Trustee” f/b/o (for the benefit of) the minor child. This provides sufficient indication that your intentions are for the beneficiary to be the minor. However, in contrast to the first option, the Trustee would have no parameters in which to administer the funds.
Upon your death, the Trustee would hold the funds for the minor. If the child is 18 or older on the date of your death, the child can access all of the funds. Under this option, the Trustee would have the ability to open a bank account and deposit those funds in the adult’s name, but specifically as Trustee for the minor.
Option 3 — Use the Uniform Transfer to Minors Act
The third alternative is to name the minor as the primary beneficiary. If money is disbursed to the minor and that amount is less than $15,000, the parent or guardian of the minor could request that the financial institution transfer the monies to the parent or guardian of the minor as trustee for the child under the Uniform Transfers to Minors Act (UTMA). Please note that under the UTMA alternative, the parent or guardian would open a UTMA account at a bank or financial institution. The UTMA is not allowed for transfers over $15,000.
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Call or text 800-929-1725 for help creating an estate plan that conforms to your wishes concerning your loved ones. We have offices in Wharton and El Campo in Wharton County, Fulshear and Richmond in Fort Bend County, and Bay City in Matagorda County. Appointments can be in-person, online, or by phone.