Massachusetts parents want to be able to provide for their children — even after death. However, minor children cannot legally inherit property. Therefore, the biggest question involves how to leave assets to them.
Naming a minor child directly as the beneficiary of an asset could result in numerous legal issues upon a parent’s death. In dealing with the issue, a Massachusetts court can easily misinterpret the parent’s intentions, which could lead to unintentional delays and interference. An account created under the Uniform Transfers to Minors Act would allow its owner to choose a custodian for the account upon his or her death but would not allow control over how it is distributed.
Creating a trust with the minor child as a beneficiary would allow a parent to choose the trustee — the person who will administer the trust — and to control when and how the beneficiary receives the assets. The trust can then be named the beneficiary on any accounts intended to be passed on to a child. If there are multiple children, a trust can be created for each of them, or one trust can cover all of the children. It all depends on an individual’s wishes and estate-planning goals.
Leaving assets for minor children may seem complex, but the extra effort put forth on the front end will prevent problems in the future. Family members will have one less thing to worry about during an already difficult time. Meanwhile, the individual gains the peace of mind that his or her minor children will be taken care of in the event of his or her death.
Source: Time, “The Perils of Leaving an IRA to Your Kid“, Herb White, Dec. 24, 2014