IRA Contingent Beneficiary – Minor
I have a trust and have had the trust as the contingent beneficiary since I created it in 2006 as they were all under 18 at the time. I know have children that are 30, 19, and 17 and looking to change the contingent beneficiary to my kids. As I understand, it is okay for the 2 older but I cannot name my 17 years old as a contingent beneficiary, or can I. Is this a good idea or should I wait? She will be 18 in 10 months so still sometime before then. Thanks
Jim
Permalink Submitted by William Tuttle on Thu, 2021-03-25 02:56
A minor as beneficiary is not a good idea. Minors can not inherit financial accounts. A property guardian would normally have to be appointed subject to full court jurisdiction and oversight. Which in some jurisdictions can be very onerous. Although, some states will allow UTMAs to be created for smaller amounts.
If you don’t want to maintain the trust, another option would be to designate a custodian for a UTMA (UGMA in SC). Only the UGMA in SC and UTMAs in KY and SD must terminate at age 18. About 10 states (and increasing) can have an age of termination up to age 25, with the remaining states at or up to age 21.