Question: Property inherited by a minor normally does not go directly to the minor but is managed by an adult. In my state, the age of majority is 18. My beneficiary lives in Nebraska where the age of majority is 19.
I have two questions: First, am I correct in assuming the definition of minor in my beneficiary’s state of residence will apply? If I die and my beneficiary who lives in Nebraska is 18, can my personal representative distribute the bequest directly to them? Second, should I clarify this in my will, saying that while a beneficiary is a minor in their state of residence, distributions can be made to their parent or guardian on their?
Response: Interesting question. It merges two issues, whether the personal representative of the estate can distribute funds or property to a minor and whether the beneficiary can deposit or negotiate the check. The estate can always issue a check to any recipient no matter their age, but minors typically can't open a bank account without a parent or co-guardian as co-signer.
So, if you were to die while your beneficiary was age 18, your personal representative could send them a check for their share of the estate. If they do not already have a custodial or co-owner account set up in Nebraska, they would have to have a parent or co-guardian open one with them to deposit the check.
In the alternative, if they do not have a cooperative "adult"; to help out, they should be able to open an on-line account with an institution that is chartered in a state that has an age-18 majority.
Or the personal representative could wait a few months to send out the check until they’ve had theirs 19th birthday.
Since there’s almost always a relatively simple “work around,” I don't think you need to make any provision for this in your will.
However, this begs the question: At what age should someone receive an inheritance? If we’re talking about a relatively small bequest, it probably doesn’t matter very much. But if it’s a large inheritance, you may not want the young adult to receive it outright, whether at age 18 or 19. It could interfere with their ability to receive financial aid at college or simply with their motivation to study or work. They probably don’t have the experience and expertise to manage a large investment portfolio.
For this reason, the wills and trusts we draft in our office typically delay outright distributions to age 25 or later. Sometimes they provide that portions of the inheritance be distributed at different ages, to give the recipient access to some funds without waiting too long, as well as the opportunity to experience responsibility for savings and investments before receiving everything.
They may provide that half be distributed at age 25 and the balance at age 30, or a third each at ages 25, 30 and 35.
While the beneficiary is younger than these ages, the personal representative or trustee can continue to manage the funds for their benefit and make distributions as they deem appropriate, whether for educational purposes or basic living expenses.
Harry S. Margolis practices elder law, estate and special needs planning at Margolis Bloom &
D’Agostino in Wellesley, Massachusetts, and a Fellow of FreeWill.com. He is author of The
Baby Boomers Guide to Trusts: Your All-Purpose Estate Planning Tool and answers consumer
questions about estate planning issues at www.AskHarry.info. Please post your estate planning
questions there.
www.AskHarry.info