In California, children are not able to inherit assets in their own name. This doesn’t mean that you can’t leave your estate to your minor children. It means, however, that they will not be able to own the assets you leave until they reach legal adulthood, or the age of 18. If you want to leave your estate to a minor child, it must be in a way that will benefit them until they are old enough to take possession of and manage those assets on their own.
Leaving Your Estate Through a Will
There are two options available to you if your children are named in your will.
The Uniform Transfers to Minors Act governs how property is transferred to children through a will. Under UTMA, if you choose to leave assets to a minor child, you will specify this in your will and name an adult custodian to manage these assets until the child comes of legal age to do it him or herself. This authorizes the court to transfer the assets to the custodian who is then required to hold or manage them on behalf of the minor child. Once the minor child comes of age, the custodianship ends, and your child will then have the right to use those assets for anything.
If the will doesn’t include UTMA language, your executor may use UTMA to name a custodian and transfer these assets. If the assets are worth less than $10,000, this can be done without the court’s approval. For property worth more than $10,000, however, the court must first approve the custodianship unless a professional trust company or trustee that does not require a bond has been named as custodian.
Using a Trust to Leave Assets to a Minor Child
While UTMA allows a simple and direct way to leave assets to a minor child, trusts are often a preferable way to do this, especially if your estate is significant. A trust will also provide greater tax advantages.
You may choose to form one trust, separate trusts for each child, or a family pot trust to leave assets to multiple children in your family. You will appoint a trustee to manage, invest, and use the assets in the trust to pay for the children’s expenses until the time specified in the trust agreement when they will be transferred over to them. One of the advantages of trusts is they can restrict children from gaining full access to assets until you feel they will be more mature and able to handle their management on their own.
What Happens if There is No Trust or Will in California?
If you have left no direction for assets left to your children, the probate court will appoint a property guardian. This guardian is the guardian of the estate, unlike the guardian of the person, and will be responsible for managing assets on behalf of your children and reporting expenses and investments to the court.
Having a well-conceived estate plan is essential, especially when you want to have an ultimate say in how your minor children will be cared for. Without a will or trust, the state will decide the guardianship of your children and how your assets will be distributed. At the Law Offices of Roshni T. Desai, our skilled Orange County estate planning lawyers will take the time to understand your unique needs and offer you the best possible options. Call us at (714) 694-1200 or contact us online to schedule a free consultation.