Kyle Shannon 
A well-structured estate plan is crucial for protecting the money you plan to leave for a loved one. But what if that individual is still a child? Will they receive that money right away, or are they not allowed to receive assets at a young age? This guide explores how to leave money to a minor, whether they are your children, grandchildren, nieces, or nephews.
Can You Leave Money to a Minor in Tennessee?
While a minor can inherit money or property, the Tennessee inheritance laws enforce rules to protect and manage the inheritance until the child reaches the age of majority. The age of majority is when an individual becomes a legal adult with legal rights and responsibilities. In Tennessee, the age of majority is 18. Once the child reaches this age, they may receive their inheritance.
What Happens When a Beneficiary Is a Minor?
A beneficiary is a charity, family member, or friend who will gain something from your estate after you pass on. If your beneficiary is a minor, a guardian will manage the inheritance until the child reaches age 18. Intestate succession in Tennessee is when you pass on without a will. In a case like this, if you leave money to a minor, the probate court will appoint a guardian to manage the funds or property until the beneficiary turns 18.
The process of establishing legal guardianship in Tennessee can be challenging and complex. For example, it could become costly and time-consuming, and sometimes, the appointed guardian may not have the child’s best interests in mind. This situation often leads to potential disputes, conflicts, and legal battles with family when loved ones disagree on the asset management or appointed guardian. For this reason, it is best to establish a trustworthy guardian yourself to manage the inheritance until your beneficiary is old enough to manage it themselves.
How to Leave Money to a Minor
One way to leave money to a child is by establishing a trust. The trust allows you to designate a minor as a beneficiary and appoint a trustee who will manage the assets until the child becomes a legal adult.
If preferred, you may establish a different milestone for your beneficiary to inherit their assets. For example, you might set a condition that they may only inherit and manage the assets once they turn 21. This method gives you more control over how trust assets are managed and when and how the child receives their inheritance. There are various types of trust to choose from:
- Revocable living trust: Revocable living trusts are one of the most common trust types. It allows you to create a plan for your assets and maintain control over them during your lifetime. You may also designate provisions for distribution after your passing. The benefit of this trust is that you can make modifications if circumstances change.
- Irrevocable trust: This type of trust transfers the ownership of assets as soon as you have created it. You cannot change or adjust the trust without the consent of the beneficiary and trustee. Although it offers less flexibility, irrevocable trusts often have additional tax benefits and asset protection.
- Special needs trust: Special needs trusts are beneficial for minors with special needs. It allows beneficiaries to maintain eligibility for government benefits like Supplemental Security Income (SSI) or Medicaid even though they benefit from an inheritance.
- Trusts for children: A trust protects the child’s assets until they are old enough to manage them responsibly, either at age 18 or an age you establish in the trust. Until then, the trustee will oversee the fund, protect it, and make decisions on the child’s behalf.
Benefits of a Trust to Protect Minor Beneficiaries
Creating a trust for a minor can set up a well-structured estate plan that protects the child’s inheritance. Trusts for minors come with various benefits, including:
- Protects assets from other relatives: Leaving your money in a trust for a minor allows you to assign a responsible trustee to manage the assets until the beneficiary reaches a mature age to handle the inheritance. Assigning a trustee is better than letting the court establish a guardian who may make poor financial decisions that leave the beneficiary with little inheritance. Trusts also shield the assets from divorces, creditors, remarriages, and other events that might put funds at risk.
- Supports your preferred distribution of assets: Trusts allow you to leave money to a minor for specific milestones, such as a wedding, college, or housing. You may simply state that the funds in your trust are meant to provide support when your inheritor reaches that specific milestone. An estate planning attorney may help you sort out the details of your wish so it is clear and specific enough for your beneficiary and trustee to understand.
- Protects assets from beneficiaries: Minors and college-age adults sometimes lack the financial experience to manage money wisely. Trusts allow you to set an age at which beneficiaries can access their inheritance when they are likely more financially responsible.
- Controls the distribution timeline: Basic probate processes after someone’s passing typically allow asset transfers to happen soon after the process ends. A trust provides an opportunity for assets to be distributed over a period of years to lengthen the impact of your wealth on beneficiaries.
How a Trust for Children Works
The trust will protect the assets until the inheritor reaches the age or condition you establish in your estate plan. Until then, the trustee will manage these assets. When the beneficiary reaches the required age, they will receive notice that their assets from the trust are available to them now.
Work With a Trust Attorney at Crow Estate Planning & Probate
Estate planning is crucial to helping improve financial stability in your loved ones’ lives even after you are no longer with them. At Crow Estate Planning & Probate, we understand how important this is and prioritize keeping our clients informed to help them build efficient and effective trusts and estate plans.
Our trust attorneys work to understand your unique financial situation, goals, and who you plan to protect. Using this information, we’ll advise you on ways to form your trust and estate plan to meet those goals. To learn more about creating a trust for minor beneficiaries, schedule a free consultation today.
