September means back to school for Illinois families. Parents are managing schedules, permission slips, sports, homework and the thousand other details that come with raising children.
But there is one responsibility that is much easier to put off:
What happens financially to your children if you aren’t here?
Many parents assume the answer is simple.
“My children get everything.”
But if your children are minors when you die, leaving everything to them can create legal and practical complications when a minor child inherits property. A young child generally cannot simply take control of a substantial inheritance, manage an investment account, sell inherited property or make financial decisions involving estate assets.
That raises several important questions about when a minor child inherits property:
Who controls the child’s inheritance?
Does the probate court become involved?
Does the surviving parent automatically control the money?
What happens when the child reaches adulthood?
And perhaps most importantly:
Could better estate planning have given you more control over how that inheritance is managed?
At Estate & Probate Legal Group, we help families in Oak Brook and throughout DuPage, Cook, and Kane Counties understand how Illinois estate planning and probate affect the people they want to protect most.
Imagine a married couple with two children, ages 8 and 12.
Their wills essentially say that if both parents die, everything goes equally to their children.
That sounds reasonable.
But what happens if both parents are killed in an accident?
An 8-year-old cannot simply open an estate bank account and receive a check for $150,000.
A 12-year-old cannot manage an investment portfolio.
A child cannot realistically negotiate the sale of the family home or decide how inherited money should be invested and spent.
Someone has to manage those assets.
The question is whether you establish that structure while you are alive or leave your family to determine what happens after your death.
This is one of the most important distinctions for Illinois parents to understand.
There are really two separate questions:
Who takes care of my child?
and
Who manages my child’s inheritance?
Those responsibilities do not necessarily have to belong to the same person.
You may have a sister who would be a wonderful caregiver but who struggles with finances.
You may have a brother who is financially sophisticated but lives across the country and would not be the right person to raise your children.
A thoughtful estate plan can consider those roles separately.
Depending on the plan and circumstances, different people may serve as guardian of the child and trustee of a trust created for the child’s benefit.
That can be a feature, not a problem.
Parents should not assume that a surviving parent automatically has unrestricted authority over every asset inherited by a minor child.
Illinois law distinguishes between guardianship of the person and guardianship of the estate.
A guardian of a minor’s estate has responsibilities relating to the child’s property and finances. Court involvement, reporting and other requirements may apply depending on the circumstances.
This matters particularly when a child inherits substantial assets directly rather than through a properly structured trust.
The fact that someone is the child’s parent or caregiver does not necessarily mean that person can simply deposit the child’s inheritance into a personal bank account and spend it as he or she sees fit.
Inherited assets belong to the child.
When a minor inherits property and owns property requiring management, the court may need to appoint someone with legal authority to manage that property.
That role is different from simply being the adult who takes care of the child every day.
A guardian of the estate may have responsibilities involving:
The exact requirements depend on the circumstances.
This additional court involvement is one reason parents and grandparents should think carefully before leaving substantial assets directly to young children.
Suppose Grandma’s will says:
“I leave $100,000 to my granddaughter, Emma.”
Emma is 10 when Grandma dies.
Emma may be the beneficiary, but she cannot simply be handed $100,000 to manage herself.
The executor has to administer Grandma’s estate properly, and the child’s inheritance must be handled according to the will and applicable Illinois law.
Depending on the estate plan and the nature and value of the inheritance, additional legal steps may be necessary to protect and manage the property.
This can surprise families who assumed the executor could simply give the money to Emma’s parents.
Real estate makes the situation even more complicated.
Suppose a parent leaves a home directly to two minor children.
Who pays the mortgage?
Who pays the property taxes and insurance?
Who decides whether repairs should be made?
Can the property be rented?
Can it be sold?
Where does the money go if it is sold?
What if one child eventually wants to keep the home and the other wants to sell?
Leaving real estate directly to minor children can create years of practical and legal issues that parents may never have intended.
Estate planning allows parents to consider these questions before they become probate problems.
Instead of leaving a substantial inheritance outright to a minor child, parents and grandparents can consider creating a trust.
A trust can allow you to name a person or institution – the trustee – to manage property for the child’s benefit according to instructions you establish.
For example, a trust might permit money to be used for appropriate purposes such as:
The trust can also establish when and how the child eventually receives control of the remaining assets.
That provides something a simple “everything to my children” provision may not:
A plan for the years between your death and your child’s financial maturity.
Parents should think carefully about this issue.
Imagine your child receives $300,000.
Would you want that child to have complete control over the entire amount immediately upon reaching adulthood?
Some parents would.
Many would not.
There is an important difference between being legally an adult and being financially prepared to manage a large inheritance.
An 18-year-old may be making decisions about college, employment, relationships and living independently for the first time. Adding unrestricted control of a substantial inheritance can create risks parents never intended.
Trust planning can allow parents to establish a more deliberate structure.
Depending on the family’s goals, a trust might continue beyond age 18 and provide distributions under terms established by the person creating it.
Creating a trust is only part of the decision.
You also need to decide who should manage it.
A trustee may be responsible for significant financial decisions over many years.
Ask yourself:
And then ask another critical question:
Who is the backup trustee?
Your first choice may die, become incapacitated, move away or simply be unable or unwilling to serve.
Successor trustees are not filler in an estate planning document. They are part of the plan.
The situation can become even more complicated when a parent dies without a valid will.
Illinois intestacy law determines who receives probate property when someone dies without a will.
If minor children are among the heirs and a minor inherits property, their age does not prevent them from having inheritance rights.
But it does create the question of who will legally manage the property they inherit.
Dying without a will also means the parent loses the opportunity to provide important instructions and nominate people for key roles through an estate plan.
The law supplies default rules.
Those rules may be very different from what the parent would have chosen.
Parents sometimes create a will or trust and assume the planning is finished.
Then they name their minor children directly as beneficiaries on:
This can undermine an otherwise thoughtful estate plan.
A beneficiary designation may control how an asset passes regardless of what the will says.
For example, suppose your will establishes a trust to manage your daughter’s inheritance until she is older, but your $500,000 life insurance policy names your 9-year-old daughter directly as beneficiary.
The carefully drafted trust may not automatically control those insurance proceeds.
This is why beneficiary designations should be reviewed as part of the overall estate plan.
Parents should also review accounts specifically established for children’s education.
The rules governing a 529 plan, custodial account or other child-related financial account may differ from those governing property passing through probate.
Ask:
Who owns the account now?
Who is the beneficiary?
Who takes over if the current owner or custodian dies?
Is a successor named?
Do not assume every account established “for the kids” works the same way after your death.
This distinction is especially important.
Parents often focus on avoiding probate.
That can be a valuable estate planning goal.
But avoiding probate and protecting a child’s inheritance are not the same thing.
An asset could potentially pass outside probate and still create complications if it passes directly to a minor.
The better question is not simply:
“Will this avoid probate?”
It is:
“Who receives this asset, who controls it if my child is young, and does that result match what I actually want?”
Consider this hypothetical Illinois family.
David and Michelle have two children, ages 7 and 11. Their primary assets include:
Their estate planning instructions are essentially:
Everything to each other, then everything to the kids.
But they never answered the next questions.
Who raises the children if both parents die?
Who manages the children’s inheritance?
Should that be the same person?
Who manages the house?
When should the children control the money?
Who is the backup trustee?
What happens if the person they originally chose cannot serve?
Those are not minor details.
Those are the plan.
Estate planning should address not only who ultimately benefits from your property, but what happens in the years between your death and your children’s ability to manage their lives and finances independently.
Back-to-school season is a good time for a family planning checkup.
Ask yourself:
If you cannot confidently answer those questions, your estate plan may not be finished.
Learn More: What Happens to Properties Left to Minors in Illinois?
Yes. Being a minor does not prevent a child from having inheritance rights. However, because a minor generally cannot independently manage substantial property, additional legal arrangements may be necessary depending on the asset and circumstances.
A will can name a child as a beneficiary, but leaving substantial property directly to a minor may create additional legal and administrative complications. A trust may provide greater control over how the inheritance is managed and used.
Not necessarily. Caring for a child’s person and managing a child’s property can involve different legal roles. The appropriate arrangement depends on how the inheritance is structured and the child’s circumstances.
Trust planning can provide significant flexibility in determining how inherited property is managed and when distributions are made, subject to applicable law and the terms of the trust.
Illinois intestacy law determines who inherits probate property. Separate issues may arise regarding who cares for minor children and who manages property inherited by them. Without an estate plan, parents lose an important opportunity to state their preferences and establish a structure for their children’s financial future.
Parents spend enormous amounts of time preparing their children for the future.
We choose schools. Save for college. Schedule doctor’s appointments. Attend practices. Help with homework. Plan birthdays. Teach them to drive. Encourage them to become independent.
Estate planning belongs on that list.
If something happens to you, your children need more than an inheritance.
They need a plan for who cares for them, who manages their money, how that money can be used, and what happens if your first choices are unable to serve.
Estate & Probate Legal Group helps Illinois parents and families create estate plans designed to protect their children and assists families when an inheritance must be handled through probate.
We serve clients in Oak Brook and throughout DuPage, Cook, Kane, Kendall and Will Counties.
As your children head back to school this September, take a few minutes to ask whether your estate plan is as prepared for their future as you are.
Call Estate & Probate Legal Group at 630-864-5835 to discuss your Illinois estate planning and probate needs.
This article is for general informational purposes and does not constitute legal advice. Guardianship, trusts, inheritance and probate matters depend on the specific facts and applicable Illinois law.
