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Transferring Assets to a Minor Child | The American College of Trust and Estate Counsel - YouTube
Channel: The American College of Trust and Estate Counsel
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hello my name is Jonathan Michael I'm a
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act tech fellow from Chicago I'm here
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today with Sandra Perkins hi I'm Sandra
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Perkins I'm an act tech fellow from
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Seattle Washington today we're going to
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talk about how to transfer assets to
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minor children so Sandra I know the
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question I get quite often is can I
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leave money to a minor child and the
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answer is yes but I don't generally
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recommend leaving property or money
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outright to a minor child because a
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minor child does not have legal legal
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capacity to manage money instead it's a
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better idea to leave the money to an
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adult or an institution who can manage
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the money for the benefit of the minor
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child and typically that's done through
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a trust a uniform transfers to minors
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Act account or a 529 plan now what is a
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trust and when would one utilize a trust
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for purposes of this type of gift a
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trust is a legal arrangement where you
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name a responsible adult or an
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institution called the trustee to manage
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the funds for the benefit of the minor
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beneficiary of the trust and I generally
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recommend using a trust when my client
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is making a larger gift for the benefit
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of a minor child say $100,000 or more
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you can set forth the terms of the trust
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in your will or living trust so that it
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will become effective upon your death
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for the benefit of the minor child you
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can specify how distributions can and
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should be made for the benefit of the
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minor child say health support
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maintenance education down payment on a
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house things like that you can also
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specify the termination ages for the
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trust and that can be any ages that you
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want and the trust can even last for the
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truck for the beneficiary's entire
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lifetime and there's another family
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video that goes into a lot more detail
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about trusts so you mentioned a uniform
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transfers to minors Act account now what
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is that and when would you use it the
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uniform transfers to minors act is
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a statute that's been adopted in all 50
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states and it sets forth an arrangement
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for making gifts for the benefit of
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minor children sort of like a trust
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except it's a lot less flexible this the
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terms of the arrangement are set forth
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in the statute itself I generally
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recommend using a uniform transfers to
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minors Act account when my client wants
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to make a smaller gift for the benefit
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of a minor child typically in depending
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on the state the the uniform transfers
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to minors Act account has to terminate
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at ages 18 21 or 25 sometimes you can
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choose among those ages but during the
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term of the trust the custodian can make
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distributions for the beneficiaries
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health support maintenance and education
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now you mentioned a little earlier that
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there is a thing that's called a section
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529 plan account now what is that when
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would you use it so a section 529 plan
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is a very highly tax favored account
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that people can use to save for
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children's education expenses and the
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earnings in the account grow income tax
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free and if they're distributed for
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qualified education expenses they can be
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distributed income tax free now
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typically these have been used to save
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for college expenses although recently
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the rules have been liberalized to allow
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for some pre college expenses I
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generally recommend these be used if my
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client is absolutely sure they want
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their gift to be used for education
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expenses and it's particularly
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convenient when the beneficiary already
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has an existing 529 plan that we can
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just add to in the clients will how
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about at what age do you recommend
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clients leave property to a child
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outright well that's a great question
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well the earliest age that you should
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ever do it is 18 because that's when the
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child actually has a legal capacity I
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never recommend 18
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I don't even recommend 21 any more when
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I first started practicing law in 1980
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we had all these trust that terminated
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at age 21 you never see that anymore I
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typically now recommend at least age 25
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and
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and often 30 or 35 it's just taking
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longer for young people to get
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financially launched these days and so
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the trust termination ages have been
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climbing as well now one question I get
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a lot from clients is well how do I name
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someone to take care of my child who's a
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minor when I pass away what are your
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thoughts well it is definitely possible
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to name a an individual or a couple as
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the guardians of your minor children and
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that's usually done in a person's will
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some states will allow you to do it in a
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document separate from a will in
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Washington we can even do it in a power
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of attorney so that if somebody becomes
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incapacitated there's a guardian to take
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care of their children the most
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important thing about naming a guardian
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is to be sure and talk to the people
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that you're naming as guardian you do
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not want them to find out after you've
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died that they've been named as the
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guardian of your minor children it's
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also really important to name a backup
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guardian because circumstances can
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change and maybe your first choice won't
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be able to do it you want to be sure
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there's somebody there otherwise there
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could be a fight over the custody of
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your children Thank You Sandra for your
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time today in helping us all learn
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something about how to transfer assets
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to minor children well thank you
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Jonathan
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you
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