If you have minor children, or if you plan on leaving a bequest to your young grandchildren, you should consider a trust.
In Texas if a minor (a child under the age of 18) inherits in his or her own name, then a court- supervised guardianship proceeding is necessary. The court will appoint a guardian to oversee the minor’s inheritance, and any payments to or on behalf of the minor must be approved in advance by the court. This is an expensive and cumbersome proceeding.
If you have minor children, you should designate in your will that any inheritance your children receive will be placed in trust so that the trustee that you name can manage the assets and use it for the right reasons without having to get the courts involved.
If you would like to leave a gift to your grandchildren, you should do the same, particularly if your grandchildren are young and unable to manage an inheritance for themselves.
Example: Grandma and Grandpa want to leave $50,000 to each of their five grandchildren (who currently range in age from 15 down to 2). If the grandchildren inherit this money while they are minors, a guardianship proceeding will be required in which the court will appoint a guardian to oversee the funds. If the money needs to be used prior to the grandchild’s 18th birthday, a judge must approve the expenditure. At the grandchild’s 18th birthday, the guardian must turn the funds over to the grandchild.
A better alternative is to provide in the revocable living trust or last will and testament of Grandma and Grandpa that these funds for the grandchildren will be placed in trust after the death of Grandma and Grandpa. Perhaps each grandchild’s parents could be the trustees of the trust, and Grandma and Grandpa would authorize the trustees to use the funds for the grandchild’s health, education and welfare. Perhaps Grandma and Grandpa could also provide that whatever funds remained in the trust when the grandchildreached the age of 25 (or some other age when it is more likely that the grandchild would have matured) would be turned over to the grandchild.