As a parent with minor children, you would be concerned about what would happen to your children if any type of disaster strikes you and your spouse, and either one party or both of you die. Thus preparing estate planning using legal forms is important steps in your life whether you like it or not, for the sake of your lovely children's future. By using the plan, you can leave your property to your children legally.
There are three different ways that you can choose to specify how your property should be managed, when you leave to your children:
– Under the Uniform Transfers to Minors Act, a custodianship can be used
– A trust. It can be an individual child's trust for each child or a combined family pot trust
– A property guardianship.
The Uniform Transfers to Minors Act
By way of will or living trust, you can utilize the Uniform Transfers to Minors Act (UTMA). It is a law that has been adopted by almost every state except South Carolina and Vermont, and it is an easy and convenient device for leaving property to your children. Your child's adult property manager is called a custodian, under this UTMA. You have all the rights to choose any adult you may want to be as a custodian. Depending on state law, the management period for this custodian will end when your child reaches age 18 to 25.
Leaving a gift – How UTMA works:
In your legal forms such as will or living trust, you can specify the details of property you want to leave to your child. And then identify the name as beneficiary for that specific gift. You also name the adult custodian who will be holding the responsibility of supervising the property until the time the child reaches ages when he or she will receive the property in full possession. The reasonable compensation will be awarded to the custodian for his or her services during such period of time, and usually this payment comes out of the gift property. In case your assigned custodian can not complete the job, you can also name a successor custodian who will perform the job instead.
Under the UTMA, the custodian will have broad discretion to have a control over the usage of the property for the child's interest. There is no court supervision of the custodian is required, so this is different from power of attorney forms. As the UTMA is incorporated into state law, most financial institutions should know about it so making it easy for the custodian to perform property management responsibilities for the child. Even though any separate tax return should be filed for the UTMA assets, the custodian will have to keep records so that tax returns could be filed on behalf of the child.
Generally, the less valuable the property is involved, the more appropriate the UTMA becomes after all. In case the property will likely be used up by the time the child turns 18, or for college cost, it will be sensible to use the UTMA. For example, you can leave a gift of $ 50,000 to your minor using this UTMA in your state where the actual property will be awarded to the beneficiary when your child reaches 21.