MINOR BENEFICIARIES
Leaving property to minors is a particular estate planning challange. There are two distinct problems. If property is left to minor children in a will, the Probate Court must retain control over that property and appoint a Guardian of the Estate, as a representative of the Court, to manage the minor's assets until age 18.
During that time, all money spent for the minor must be authorized, and an annual accounting must be submitted and approved by the Court. Typically, if a need for the minor arises other than ordinary living expenses, such as braces or a new flute for music lessons, the guardian must contact his or her attorney who will be required to make a court appearance to request the funds. If the expenditure is approved by the Judge, the attorney will advise the guardian and the funds will be disbursed. Unfortunately for the minor, the attorney will be paid for the court appearance to make the request, and the fees are deducted from the minor's property. The guardian is also entitled to an annual fee for services as well. When the beneficiary reaches age 18, the Court will release all of the assets without any further control.
Guardianship is costly to the beneficiary. When the minor reaches age 18, the assets are then released without any further controls of any kind. That can result in turning over substantial assets to someone without sufficient maturity or experience to manage them, leading to a wasteful, or even a cataclysmic outcome.
Even if property is left to a minor in a trust, unless the trust contains provisions setting out when and under what circumstances the minor beneficiary will receive the assets, they still will receive an outright distribution when age 18.
A much better way is for a trust to direct that the minor beneficiary will have any or all funds available for their "health, education, support and maintainence," and determined to be appropriate by a trustee selected by his or her parents, and receive the principal of the trust funds in 1/3 distribution at ages 25, 30, and 35. That way if the assets are needed to house, care for, educate or provide medical care for the minor beneficiary, they are available, and instead of receiving a single lump sum at age 18, the principal is divided over 3 stages to give the minor beneficiary the greatest chance of wisely using the funds. (Rather than buying a Red Corvette at age 18!)
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