8. Because you want your child’s inheritance to be there well past his or her 18th birthday.
Parents of minor children have a unique set of estate planning concerns. In addition to Reason #7 below, parents of minor children should generally take steps to avoid leaving their property outright to their children. If the parent of a minor has failed to engage in proper estate planning and then dies prematurely, most of the parent’s property will pass outright to the child. The child’s guardian or conservator will manage the property for the child while he or she remains a minor. But when the child turns 18 years of age, the child gains full control and access to his or her inheritance. No matter how smart, sweet or wonderful the child is, most 18 year-olds simply aren’t mature enough to mange wealth. Given unrestricted access to banking and investment accounts, most 18 year-olds will frivolously spend large chunks of their inheritance, the same inheritance the parent intended to pay for the child’s college or wedding, the same inheritance the parent hoped would be a safety net for the child. Instead of leaving property outright to minor children, we can create a Children’s Trust to hold the property until whatever age the parent anticipates the child will be mature enough to manage the property. As an added benefit, the Children’s Trust can also be designed to provide asset protection to the inheritance (see Reason #9).
