Placing safeguards for underage beneficiaries in Illinois

Placing safeguards for underage beneficiaries in Illinois

car seatHaving a child can complicate life in many ways, especially when it comes to estate planning. When parents have an underage child they should know that, there are several estate planning methods they can use to protect their child in the event that they should die unexpectedly.

Property management 

In addition to naming a guardian who will take care of their child, parents should appoint someone to manage the property that their child inherits. If a property management representative for an underage beneficiary is not specified, the probate court will determine who this will be. Some of the easiest ways to structure a property management arrangement include:

  • Naming a property guardian in the will. If the parents want to, they can name a property guardian for their children in their will. This person will be responsible for handling property the child inherits, unless otherwise specified by another legal document.
  • Appointing a custodian under the Illinois Uniform Transfers to Minors Act. Under this act, parents can choose a custodian who will manage their child’s accounts until the child reaches the age of 21. To set up custodianship, parents can name this person in their living will, trust or on one of their insurance policies.
  • Setting up a trust. Using this approach, parents can use their will or living trust to name a trustee, who will handle the money the child inherits until the child reaches a specified age. Typically, the appointed trustee can spend these funds on the child’s living, health and education expenses.
  • Devising a pot trust. If parents have more than one child, they can set up one trust for all of their children to benefit from. In this document, the parents should also name a trustee who, like in a regular trust, has the power to power to give money to the children. However, the trustee does not have to give the same amount to each child. Instead, they base this amount on what each child needs.

Parents that desire their underage beneficiaries to use their inheritance wisely once they come of age can make certain stipulations in their will or trust. For instance, parents can choose to have a third of their funds given to their child at age 25, another third at age 30 and the final third when the child turns 35.

Other safeguards 

In addition to appointing someone to help the child manage their inheritance, parents should also consider purchasing life insurance, writing durable powers of attorney and designating beneficiaries on their retirement accounts to plan for their child’s well-being. Parents should work with an attorney who can help them devise a strong financial plan for their child.

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