Our legal operations continue. We are here for you. Read more

Can a Minor be a Trust Beneficiary?

Can a person under the age of 18 be a Trust beneficiary? Yes, of course. In fact, most people create Trusts when their children are under the age of 18 (referred to as a minor). Minors normally cannot own property directly. Bank accounts, for example, must be opened in the joint name of a minor and their adult guardian (i.e., a parent). Banks also have special accounts, such as a Uniform Transfer to Minor Account, that allows a “custodian” (who is an adult) to hold money until a minor reaches a specified age, such as 18, 21, or 25.

 

You can avoid all of that with Trusts because every Trust has a Trustee. The Trustee must be an adult to legally manage Trust assets. But the Trust beneficiaries can be minors because the beneficiaries are not expected to manage the Trust assets. In the world of Trusts, the Trustee is the legal owner of Trust assets, and the beneficiaries are the beneficial owners of the assets. The trustees get the headaches, the beneficiaries get the rewards. And a settlor of any Trust can decide how long Trust assets should be held in the Trust.

Obviously, you should not distribute assets outright to a minor. And even many young people over the age of 18 would not fare well with large amounts of Trust distributions. But Trusts are flexible, and the settlor has the right to specify when Trust distributions can be made. A settlor may require the Trust assets to be held until age 25, for example. Or the settlor could require a distribution of 1/3 of the Trust assets at age 25, another 1/3 at 30, and the final 1/3 at 35. Maybe the settlor wants the Trust assets held in Trust for the entire life of the children, and then allow it to pass outright to the grandchildren. The possibilities are endless.

Estate Planning Tools

Therefore, Trusts are a far better estate planning tool than Wills. A Trust can last multiple generations, although in California Trusts must end eventually. Trusts can also be drafted to suit the needs of every different family—assuming you take the time to plan your estate properly. Minors can be Trust beneficiaries. The only remaining question is how old must the minor be before they receive their Trust distribution? That’s a question only you can answer when you create your Trust.