Planning For A Secure Future

Minor beneficiaries and state laws

On Behalf of | Jan 19, 2023 | Estate Planning

Parents, grandparents and others may wish to see young ones cared for in an estate plan. So, naming young persons as beneficiaries in wills and transfer-on-death accounts and life insurance policies is not uncommon. However, certain issues may arise when leaving assets to underage California residents. People might need to review their estate planning strategies when beneficiaries are minors.

Minor beneficiaries

In California, a minor cannot legally take possession of any assets left to them. Such would be the case with a will, transfer-on-death account or a jointly-owned account. The minor could take possession of the assets when they reach the age of 18. At 18, a minor becomes a legal adult.

Under state law, an appointed guardian could handle issues with the minor’s estate. Be aware that things could become more complicated when the value of the assets left to the minor exceeds $20,000. A probate court judge may look for specific skills in a guardian when dealing with an estate, so a family relationship may not be the primary factor the judge examines.

Estate planning concerns

The estate planning process may involve putting funds into a custodial account through the Uniform Gift to Minors Act (UGMA). The California Uniform Transfers to Minors Act is a state version of the UGMA someone could consider. An estate planner might consider devising a trust that addresses issues with underage beneficiaries.

Anyone considering do-it-yourself estate planning might not be aware of these unique rules and laws related to minor beneficiaries. Without an understanding of California’s estate law statutes, the planner could make significant mistakes that do not benefit the minor during probate.