It is a natural impulse to want to name children, grandchildren, or other descendants to inherit a portion of assets in your estate plan. The naming of a minor beneficiary directly on an account, however, can create unforeseen challenges with your estate plan. The following reviews some helpful reminders about naming minors as beneficiaries as well as why you might want to consider other options.

Unintended Consequences Might Ruin Your Plans

Clients often assume that their estate plan is complete after they have signed their will and trust. These clients will often then proceed to name the same beneficiary on all of their estate planning documents. If you name a minor as a beneficiary, some substantial and undesirable situations might occur. For example, assets might require the appointment of a conservator, which can lead to a time-consuming and costly process. 

The person appointed by the court to act in such a role also might not be the same individual that you would want controlling your assets. Additionally, many jurisdictions require an inventory as well as annual accountancy to be filed with the court even if the conservator is a parent of the minor. Assets held in a conservatorship then pass directly to the minor after the minor reaches the age of majority. In Oklahoma, the age of majority is currently 18 years old.

Another particularly undesirable consequence associated with naming a minor as a beneficiary occurs if the minor is a child with special needs. Naming the child as a beneficiary in this situation could put the child’s eligibility for government assistance in jeopardy. Federal law states that anyone who receives a gift or inheritance of more than $2,000 is disqualified for Supplemental Security Income and Medicaid. 

Consider Other Options

After thoroughly reviewing what could happen by naming a minor beneficiary, some people decide that it is better to simply pursue other options. Options that are recommended instead of naming a beneficiary as a minor include:

  • A trusted adult can be named as the beneficiary of a policy that will use its money for the benefit of a minor child. The challenge presented by this path is that you must make sure that the adult you nominate will be unwavering and capable of performing this duty.
  • If you have a living trust, it is possible to name a minor child as the beneficiary of the trust’s assets. A person can then name the beneficiary of a life insurance policy and the designated trustee will manage the funds on the child’s behalf.

Achieve Your Goals With an Estate Planning Lawyer

If you have goals for how you would like to pass on your assets to your loved ones, it can help to speak with a knowledgeable estate planning attorney like Jim A Lyon. Over the years, attorney Lyon has helped countless people achieve their estate planning goals. If you need the assistance of an experienced attorney, do not hesitate to contact our law firm today.