What if a minor is a beneficiary of a will in Florida?

What if a minor is a beneficiary of a will in Florida?

This is a common scenario.  However, many people might be surprised to learn that a minor's natural parents do not have all of the rights and power over a minor's property. Parents are permitted to completely manage any real or personal property a minor child receives from a will or trust, unless the amounts received exceed $15,000 in total. This is set forth in Section 744.201, Fla. Stat.

So, what happens if a minor child inherits more than $15,000 from an estate?  If no provisions are made, the Court will need to establish a guardianship over the minor's property. This will require that the Court approve distributions to the minor and will require regular accounting to be performed, even if the appointed guardian is the child's parent. This will also often involve attorneys' fees. So, it is not ideal to attempt to devise property directly to a minor without further arrangements.

“If a child receives property worth over $15,000 from an estate or a trust, their parents cannot legally manage it without a court-ordered guardianship.”

How can the expense and hassle of guardianship be avoided?

This problem can be addressed in two primary ways. The person giving the property can either (A) give the property in trust to the minor or (B) give the property to the minor through use of a Uniform Transfers to Minors Act (UTMA) account.

A trust is the more flexible option available compared to a UTMA account. Trusts can last for essentially an indefinite period and provide the settlor (person creating the trust) much greater control over the assets. Also, trusts can be used to shield assets from creditors, whereas a UTMA account by law will terminate at either age 21 or age 25 at the latest.  At that time, the UTMA account will be distributed outright to the now adult beneficiary.  By contrast, there is no requirement to distribute the contents of a trust.

Another difference is that the conservator of a UTMA account (the person managing it) has very little restriction in how they manage the account, so long as they use the proceeds for the minor's benefit. By contrast, a trust can be specifically tailored to provide for the amount and frequent of distributions and to limit the purposes for which the assets can be used.

For the purposes of asset protection, the UTMA account is protected from creditors of the conservator or minor beneficiary.  However, a creditor can still attach the assets in the UTMA account and proceed against them when they are distributed to the minor. However, trusts provide for greater creditor protection and, when properly created, can protect the trust principal against creditor claims.

Another thing to keep in mind is that UTMA accounts can have only one beneficiary.  So, a separate account will need to be created for each minor. This might not be too burdensome if the primary asset is cash; however, if real property is involved, realistically a trust will be required to devise the property to multiple people.

The advantage of a UTMA account is that it is simple and inexpensive. To create such as account, all someone has to do is title the account "[adult's name] as custodian for [minor's name] under the Florida Uniform Transfer to Minors Act." For example, Howard Cunningham as custodian for Richie Cunningham under the Florida Uniform Transfer to Minors Act.

A good estate planning attorney can help you choose between establishing a trust or UTMA account to devise property to minor beneficiaries. Either of these options is probably more suitable in most cases than a guardianship arrangement, which is the default option.
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