Estate Planning Academy Episode 19: Giving Money to Children

Give it to them directly as an inheritance

  • If they are under 18, the courts may force the money into a trust or uniform account for minors.
    • The court may name a financial manager, maybe at $100’s per hour, to manage the money.
    • Then when your children turn 18, they get a lump sum payment.
  • If they are 18 or older, then the money goes directly to your children, no strings attached.
    • They can spend it on whatever they like.
    • Nobody is managing the money to help them spread it out for education, house, retirement, etc.

Use a Uniform Trust Account for Minors (UTMA)

  • This account will hold the money until they are 18, then give it to them in a lump sum.
  • We covered what may happen when children get money at 18

Use a Revocable Living Trust

  • You get to decide now how the money will be managed and spent.
  • Do you want it invested towards education, home, then retirement?
  • You make that choice.
  • One favorite method is to pay for education for any semester they make a 2.0 or better GPA until graduation.
  • When they graduate, help them out a little so they don’t acquire debt renting an apartment and setting it up.
  • Then hold the principal until they are 25, 30, and 35 years old.