What Happens if a Minor Child Receives an Inheritance and the Parents Are Divorced?

By River Braun, J.D.

What Happens if a Minor Child Receives an Inheritance and the Parents Are Divorced?

By River Braun, J.D.

A child may inherit property at any age. However, a minor child may not take possession of the property until they reach a certain age, depending on your state's laws.

Mother cuddling her son and kissing his forehead

Until a child has reached this age, a court will determine who will manage the inheritance in the meantime. If a child's parents are divorced, most judges appoint the parent who has legal custody as the guardian or custodian for the inheritance.

There are, however, other factors that can determine who will act as guardian and what access a parent has to the inheritance. Read on to learn more.

The Age of Majority and Inheritance Value

When it comes to property that is of inconsequential value, a child may take possession of the property, depending on their age and their parent's input. For example, if a grandparent leaves your child a sentimental object in their will, you typically have the right to determine if your child can take possession of the item before turning 18 years old.

If your child inherits property or money of substantial value, the court may appoint a guardian or custodian to hold and manage the inheritance for the child until they reach the age of majority. The age of majority in most states is 18. However, in some states the age of majority could be 21 years old, depending on the amount of the inheritance.

Guardianships and Parental Access

Unless a court determines otherwise, a parent can hold and manage a child's inheritance. Some states require a court-appointed guardian or custodian to hold money or property if the value of the inheritance is over a certain amount. For example, California requires a court-appointed guardian for a minor who inherits more than $5,000.

The court may appoint a parent to manage the child's inheritance, or it could appoint another adult or financial institution. Based on the facts of the case, the court will determine what is in the best interest of the child.

Testamentary Trusts and UTMA Designations

The person who leaves an inheritance may determine who holds and manages it until the child reaches a certain age.

For example, a grandparent may establish a testamentary trust in his or her will. Within the will, the grandparent leaves a minor child an inheritance and names a trustee to hold and manage the inheritance until the child reaches a certain age. The grandparent can name anyone as the trustee, set the terms of the trust, and select an age that is older than the age of majority to transfer the funds to the child. Parents have no say in how the inheritance is managed unless they are a trustee.

If you are considering leaving property or assets to a minor child and you are concerned about mismanagement, you might consider granting the inheritance through the Uniform Transfers to Minors Act (UTMA), which has been adopted by most states. The process is simple. The person passing on the inheritance need only name the child as an heir in their will and specify a custodian to hold the child's inheritance according to the provisions of the UTMA. If a parent is not named as a custodian, he or she has no control over the inheritance.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.

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