Minors in California (those under 18) may not directly own assets. However, they can own them through a guardian. For example, a minor’s name can be on a bank account so long as it is also opened in the joint name of their adult guardian.
Another way in which minors can indirectly own assets is by being the beneficiary of a Trust. In fact, most people create Trusts while their children are under age. A minor beneficiary’s Trust shares are usually held within the Trust until they reach a specific age. It is also common for younger beneficiaries to receive their Trust share in increments rather than all at once. This helps to prevent them from making poor choices with all of their money.
Trustee as Temporary Owners of Trust’s Assets
Every Trust has a Trustee, who must be an adult. This essentially means that the Trustee is temporarily the legal owner of the Trust’s assets while the beneficiaries are the true beneficial owners of the assets. Put simply, the Trustee sows the seeds while the beneficiary reaps the reward. The amount of time that the assets are to be held in the Trust can be determined by the creator, or “grantor” of the Trust.
Age Parameters on Distribution
While those under 18 cannot own assets, those who are over the age of 18, but still young, may not do best with receiving all Trust distributions at once – especially if the distributions are large. Because of this, the grantor can make the decision to require the beneficiary of the Trust to wait until they reach a certain age before receiving the Trust assets.
For instance, a settlor can specify that all Trust assets are to be held within the Trust until the beneficiary reaches the age of 30. Alternatively, the grantor can provide the beneficiary with multiple distributions of the Trust assets. For instance, the grantor can require that the beneficiary receive 50% of the Trust assets at the age of 30 and the remaining 50% at the age of 45. There are endless choices and possibilities when it comes to deciding how Trust assets are to be distributed.
Lasting Multiple Generations
A Trustee can even be required to hold all Trust assets for the life of the grantor’s children and instead go to their grandchildren. Because of this, a Trust can last more than two generations – unlike a Will. This often makes them a superior estate-planning tool.
Heritage Legal, PC Helps Those in California to Establish a Comprehensive Estate Plan
At Heritage Legal, PC, we understand the importance of protecting your interests and the interests of those whom you care about most. We can help you to create a comprehensive estate plan that fills all of your needs and plans ahead for your loved ones. To learn more or to schedule a free consultation, contact us today!