Estate Planning Academy Episode 19: Giving Money to Children
This article by Attorney Gary DeWitt, practicing in estate planning, probate, guardianship, and elder law.
Give it to them directly as an inheritance
- If they are under 18, the courts may force the money into a trust or uniform account for minors.
- The court may name a financial manager, maybe at $100’s per hour, to manage the money.
- Then when your children turn 18, they get a lump sum payment.
- If they are 18 or older, then the money goes directly to your children, no strings attached.
- They can spend it on whatever they like.
- Nobody is managing the money to help them spread it out for education, house, retirement, etc.
Use a Uniform Trust Account for Minors (UTMA)
- This account will hold the money until they are 18, then give it to them in a lump sum.
- We covered what may happen when children get money at 18
Use a Revocable Living Trust
- You get to decide now how the money will be managed and spent.
- Do you want it invested towards education, home, then retirement?
- You make that choice.
- One favorite method is to pay for education for any semester they make a 2.0 or better GPA until graduation.
- When they graduate, help them out a little so they don’t acquire debt renting an apartment and setting it up.
- Then hold the principal until they are 25, 30, and 35 years old.