There are a lot of reasons people build estate plans. Some want to ensure their money and assets go to charity, others want to have a plan in place for their business, but most are thinking about their children. Often when you build an estate plan, your children are minors still. This has left Wisconsin residents wondering: can children inherit money from parents in Wisconsin? Collins Law can help you with that answer.
Can Minors Inherit Directly in Wisconsin?
The short answer is no. A minor does not directly inherit money in Wisconsin. For the most part, a minor in Wisconsin is considered anyone under the age of 18. Don’t worry though, this doesn’t mean you can’t ensure that your kids are properly cared for. There are three basic ways that inheritances to minors are handled in Wisconsin, and which way it works out for you all depends on how your estate was planned. The three ways are a normal will inheritance, a trust, and a UTMA or UGMA account. Let’s go over how each of these is handled.
Will Inheritance for a Minor in Wisconsin
In a typical will, you have a chance to list a guardian for your children, but you also have the opportunity to list a financial guardian for your children as well. This can be the same person or they can be separate people. A financial guardian will be in charge of any money or assets left to the minor until they turn 18.
One thing to keep in mind is that a financial guardian has control over these assets and can utilize them for the care of the minor. This can be a good thing in ensuring that the minor is properly cared for, but it can also easily be abused and the minor can have a difficult time proving abuse once they turn of age. For this reason, sometimes it is a good idea to keep both types of guardianship separate.
A similar process is followed when there is no will The law will dictate who gets an inheritance, and in the event that a minor inherits, the courts will assign a guardian and a financial guardian, which are still often the same person. That’s one more reason you should at least have a will. Who better to decide who should take care of your kids when you are gone, you or the courts? We think we know your answer.
Trust Inheritance for a Minor in Wisconsin
A trust is a much more custom approach to handling an inherence. For one, you can dictate at which age a child will inherit. You still can’t provide an inheritance before 18, but you can choose to inherit the money later, provide the money slowly over time, and even include circumstances under which that money should be released. Perhaps you don’t want the trust to distribute if they are currently in rehab or if the money will go to creditors.
Trusts are very flexible, giving you the most control over how and when people inherit. Like before, you can also enable money in a trust to be used for the health, education, maintenance, and support of the beneficiary before they receive full access and control.
UTMA and UGMA Inheritance for a Minor in Wisconsin
UTMA and UGMA accounts—which stand for Uniform Transfers to Minors Act and Uniform Gift to Minors Act respectively— work very similarly to each other though they have some differences in terms of taxes and investment options. For our purposes here, we can consider them to be the same.
Instead of 18 years of age, they use 21 as a benchmark for when their funds should be released to beneficiaries. However, under this act, you can also list a different age as well as long as it is over the age of 18.
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