As is the case in the rest of the country, minors here in Texas may not directly inherit property. If you leave a bequest in your will to someone under the legal age of majority, your executor will need to spend estate resources and time to appoint a conservator to hold the assets on behalf of the minor child until he or she reaches adulthood.
The person appointed to that position may not be someone you would trust with the minor's inheritance. If you want to make sure that your heir or beneficiary receives the inheritance you intended, you will need to make other arrangements.
Set up a trust
If you create a trust with the minor as the beneficiary, no one can get to the assets during the life of the trust, including creditors, ex-spouses and anyone else who may want to attach the property or take advantage of your loved one. Furthermore, you decide when and how the trustee makes distributions. For instance, you may want to make sure that the beneficiary's college tuition and books come out of the trust, but not money for a new car.
You may decide to stagger distributions at certain ages. Perhaps you think he or she could handle the money later in life, so you stipulate that the trustee waits to make distributions until ages 25, 30 and 35 as an example. You also determine when the trust ends. Using the previous example, the trustee could fully distribute whatever assets remain at age 35, thus ending the trust. In the alternative, you may want the trust to last for your loved one's lifetime and require smaller distributions periodically.
If you don't believe the amount of the inheritance warrants the creation of a trust, you may put the money into a 529 account. The only problem with these accounts is that the money in them must go toward college education. If the beneficiary fails to go to college, the account must transfer to another, preferably college bound, beneficiary.
The other alternative is to open a restricted account under the Uniform Gifts to Minors Act or the Uniform Transfers to Minors Act. The primary caveat with these accounts is that the minor receives the full amount in the account upon reaching the age of majority, which is usually age 18 or 21.
Need help deciding?
It's possible that this information only made your desire to leave an inheritance to a minor more enigmatic and complex. Fortunately, you do not have to figure it out on your own. An estate-planning attorney can review your situation, make a recommendation and then assist you with implementing whatever path you choose.