Minor Child Inheriting: Problem #1

Minor child inheriting? –Inheritance frozen. Problem # 1


If parents are not careful, after their deaths their minor child could inherit assets such as the house, bank accounts, vehicles, IRA’s, and life insurance. As it is, the inheritance cannot be used. Banks, brokers, and financial institutions will not deal with a minor. They will not transfer inherited assets to children under 18, nor allow them to have accounts in their names. The reason is that minors are not bound by a legal contract. They have no legal capacity to sell or borrow on real estate.

Thus, parents are dead. Assets are frozen. Child in need.

One solution, though not preferred, not automatic, not cheap, not easily used, and not very flexible, may be the only option remaining. It requires a court, and in San Diego it is the San Diego Probate Court. Access to the inherited assets can be gained by a court-appointed guardian for the child.

A family member begins the process by hiring an attorney who will file the necessary petition with the court. After appointment by the court, the guardian has legal authority to collect the assets due the child. Title to the assets will be held by the guardian for the child, and the court will instruct the guardian how the assets may be used, based on what the child needs rather than on what the child wants. The guardian must periodically file an accounting with the court detailing all income and expenses. Court costs and other expenses paid from the child’s fund will be incurred. Those include fees to the guardian and the attorney. A guardianship is burdensome and a drain on the child’s inheritance. It is neither quick nor fast.

How can you avoid the above problem? While you have the chance, make a living trust.  See blog entitled:

Minor child inheriting? – Problems solved

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