Thinking of naming minor children as beneficiaries of your life insurance policy, retirement account, or investment account? Think again. While minors can certainly inherit assets, they are still legally ineligible to manage those assets. If no trust or guardianship has been created, the court will appoint a guardian to oversee the child’s “estate” until that child turns 18, requiring legal fees and ongoing reporting to the court.
“If a distribution may be made to minor children or disabled persons, a last will may be important to enable property to be properly held for minor children or disabled persons,” Indiana University’s Office of the Vice President & General Counsel explains.
Always alert to keeping both our Indiana estate planning clients and our blog readers informed about new developments in the law, we note the following legislative update, effective July 1 of this year (just a week ago!):
“Allows a person indebted to a minor or having possession of property belonging to a minor to pay the debt or deliver the property without a court order in an amount up to $25,000 and to pay the debt or deliver the property to a custodian under the Indiana Uniform Transfers to Minors Act.” ,
In other words, a minor can now receive $25,000 (up from $10,000) without requiring that a guardianship be established. The law now “allows a person having the care and custody of a minor with whom the minor resides to petition a court to compromise a claim on behalf of the minor.”
If naming minor children as direct beneficiaries is not the best course of action, what are better estate planning alternatives? American College of Trust and Estate Counsel lists three:
- Uniform Transfers to Minors Act (UTMA)
- 529 accounts
- Living Trust
At Geyer Legal Group, PC, our work is designed to help prepare our clients for all of life’s twists and turns. For parents of young children, knowing how to distribute assets for the benefit of minor children is of primary importance.
– by Cara Chittenden, Attorney with Geyer Legal Group
