It's a well known fact that children under the age of 18 can't own assets. They can't open a bank account or buy stocks in their name. However, it is not uncommon for well-intentioned parents, grandparents, or other family members to give money or assets to a child. In most cases, these gifts are held in custodial (UTMA or UGMA) accounts. These accounts, also called custodial trusts, can be dangerous since any assets held by them automatically transfer to the child when they turn 18 or 21. If that child is not old enough to be fiscally responsible, your good intentions may actually do more harm than good!
Our solution to this problem is to prepare what is called a 2503(c) minor's trust for each child with one of our attorneys. The minor's trust can be structured to hold assets until the child is old enough to make good financial decisions. The minor's trust can also be used for estate tax purposes as a way to reduce the parent's or grandparent's taxable estate or can be named as a beneficiary of either life insurance or retirement plans. Overall, a minor's trust has much more to offer, and is much safer than a custodial trust.
At AvoidProbate, we believe this valuable estate planning tool is greatly underused and overpriced by other attorneys. That is why we offer them at a reasonable flat fee so that many families can use this valuable strategy to its best advantage.