Leaving an inheritance to minors in Washington State requires careful consideration and planning to ensure that their best interests are protected. Here’s a brief guide on how to handle this situation, focusing on some key aspects and considerations:
1. Create a Will or Trust: The first step is to establish a legally binding document, such as a will or trust, that clearly outlines your wishes regarding the inheritance. A will is a common choice for smaller estates, while a trust provides more flexibility and control over the distribution of assets.
2. Designate a Guardian: When leaving an inheritance to minors, it is crucial to appoint a guardian who will manage their assets until they reach the age of majority (18 years in Washington State). The guardian should be someone you trust to act in the best interests of the children and handle their financial affairs responsibly.
3. Establish a Trust: Consider setting up a trust to hold and manage the inheritance for the benefit of the minors. A trust allows you to appoint a trustee who will oversee the assets and distribute them according to your instructions. This arrangement provides added protection and control, as you can specify when and how the assets should be disbursed.
4. Consider a Testamentary Trust: A testamentary trust is a type of trust that is established through a will and only takes effect after your death. It can be a suitable option if you have concerns about minors managing substantial assets before reaching adulthood.
5. Consider using Washington State’s Uniform Transfer To Minors Act. The Washington State Uniform Transfer to Minors Act (UTMA) is a state law that provides a mechanism for transferring assets to minors without the need for a formal trust. The UTMA allows a custodian to transfer money, securities, real estate, and other types of property to a minor, who is referred to as the custodial property. Under the UTMA, the custodian holds and manages the property for the benefit of the minor until the minor reaches a certain age, which is typically 18 or 21 years old. The custodian has the authority to invest, reinvest, and manage the property, and can use the income and principal of the custodial property for the minor’s benefit, such as education, healthcare, or other expenses.
5. Specify Age or Milestones: Determine the age at which the minors will gain control over their inheritance. While 18 is the legal age of majority in Washington State, you may want to consider a higher age or specific milestones, such as completing higher education or reaching a certain level of maturity, before granting full control.
6. Appoint a Trustee: Choose a trustee who will manage the assets and make financial decisions on behalf of the minors. The trustee can be a family member, a trusted friend, or a professional fiduciary. It’s important to select someone who is financially responsible and able to carry out their duties impartially.
7. Consider Professional Advice: Consulting with an estate planning attorney or a financial advisor can be immensely helpful in navigating the complexities of leaving an inheritance to minors. They can provide guidance tailored to your specific circumstances, ensuring that your wishes are properly documented and legally sound.
8. Regularly Review and Update: Life circumstances change, so it’s essential to review and update your estate plan periodically. Changes in relationships, finances, or the legal landscape may necessitate modifications to your plan to ensure it remains relevant and aligned with your intentions.
If you need help providing for a minor, please give us a call at (206) 408-8158.