A child considered a minor by her state of residence can inherit property, but she can't manage it. The legal age of inheritance, meaning control of the property, varies by state and by the value of the inheritance but is 18 in most cases. For example, a child may take control of his inheritance at 18 in Colorado, but if the inheritance is more than $10,000, he has to wait until he's 21. A parent or relative of a minor child has more than one option when deciding how to provide for a minor's inheritance.
The Uniform Transfer to Minors Act, enacted in all states but Vermont and South Carolina at the time of publication, allows for the creation of property custodians for minors. A person may name a property custodian specifically for a minor child's inheritance in his will. The custodian manages the assets left to the child in the will until she reaches the state's legal age of adulthood. Once the child is considered an adult, she has full control over her inheritance. A person may name a property custodian as beneficiary on behalf of a minor child on accounts and plans that require beneficiary naming, such as retirement plans, but his wording must indicate his intention. For example, he may list, "John Doe, as custodian for Jane Doe, a minor child, under the Uniform Transfer to Minors Act" as the beneficiary on a retirement plan.
Property Guardian or Conservator
If in your will you name a guardian for the inherited property of any minor child, the property guardian will manage all the child's inherited assets until she reaches adulthood. A property guardian named in a will must receive court approval; the court formally appoints the guardian. A property guardian may have to post a bond with the court as a condition of appointment. The bond amount varies, depending on state laws and the size of the property the guardian will manage. The bond protects against loss to the child's assets. Some states use a conservator instead of a property guardian, but the conservator performs the same duties.
A person may create a trust in his will and leave the inheritance of a minor child to the trust for the child's benefit. He makes a trust agreement to manage any property placed into the trust. The terms of a trust created by a will are usually included as part of the will itself, and the will names a trustee to manage the trust. Trust terms vary, depending on the person's wishes. He may set rules for trust distributions -- including what trust money may be used for -- and the frequency of the distributions. Unlike assets managed by custodians and guardians, property in a trust may remain in trust after the child reaches adulthood. A trust's creator can specify at what ages the beneficiary receives distributions -- such as 21 and 25 --a nd set an end date for the trust, such as the beneficiary turning 30.
The court may appoint a property guardian to manage a child's inheritance if the giver of the inheritance didn't provide for its management by an adult or a trust. The authority of a guardian chosen by the court usually ends when the child becomes a legal adult. Some states have asset limits for property custodians and guardians. If the value of the child's inheritance exceeds those limits, a separate conservator is appointed to manage some or all the child's inherited property.