When preparing an estate plan, special care is needed where a person wishes to leave assets to a minor. This is because asset or property transfers to a minor are often governed by the California Uniform Transfers to Minors Act (UTMA). Our California estate planning attorney can answer any questions you may have about how to leave assets to a minor in California.
What Is the California UTMA?
The California UTMA is a law that mirrors similar laws in other states. It provides that to transfer property to a minor, a person needs to choose a custodian to manage the property until that minor reaches a specific age, between 18 to 25. So, if you wish to leave assets to a minor in your will or trust, you may need to consider who will be the custodian for that bequest.
A custodian will have the ability and right to control the assets and manage them for the minor until that minor reaches the specified age. So, for example, the custodian could invest or reinvest the property with minimal oversight from anyone else once the custodial account or other mechanism is established.
When the minor reaches the specified age, the custodial relationship ends, and the minor gains control of the property or asset. Once they have control, there are no further restrictions on how they may use the assets.
The Interplay of the California UTMA and Your Estate
Even if you don’t use the California UTMA to leave assets to a minor in your will or trust, the executor of the will or trustee of the trust can use it. This is because it is often the simplest way to transfer property you bequeathed to a minor. If the assets you have left are less than $10,000, the transfer can be done without court involvement in California. Where the property is more than $10,000, then the court must approve the custodial arrangement, with certain exceptions.
Alternatively, you can use a trust to leave assets to a minor. A trust allows you to control the specifics of when and how a minor receives assets. It may also have tax advantages. There are many ways to accomplish this. You can create a trust for each minor or establish one family trust to provide for multiple minors.
When creating a trust, you choose a trustee to manage the assets and carry out the terms of the trust. Using a trust is an excellent way to provide for minors because it allows you to decide the amount and timing of distributions to children and what kind of things the trust can pay for. You may want the funds to be used for education or medical expenses. Or you may wish for the trust to provide more for a minor with unique or special needs.
A trust can also be an attractive option because you can delay when a minor gets control of assets beyond age 25. For example, you can choose for a beneficiary not to have full access until age 35, or to gradual access as they reach certain birthdates. You can even provide that a trustee will manage the assets for the rest of that person’s life. These may be good options if you have concerns about a person’s maturity or financial savviness.
However, the structure of the trust you use does matter when it comes to accomplishing these goals. It is best to speak with a qualified estate planning attorney.
Speak With an Attorney
You may have many options for leaving assets to a minor. Every case is different, and an estate planning attorney can tailor your estate plan to your personal needs. We invite you to contact our office today for a free consultation. We can help you develop an estate plan that works for you and your loved ones.