Parents usually want their estate plans to protect their children. Becoming a parent is often one of the motivating factors people reference when sitting down to make their first estate plan. You want to have the peace of mind that comes from knowing that there is a guardian who will take care of your children and that they will inherit your financial resources for their future stability.
You have multiple options regarding how you structure an estate plan in New York. There are usually three main methods by which you can leave an inheritance to your children.
A direct inheritance is arguably the most common method
Naming your children as your heirs or beneficiaries in your estate plan or last will is the easiest way to give them an inheritance. However, if they are still minors when you die, the guardian who assumes responsibility for your child could potentially use some or even all of that inheritance before your children become adults themselves.
A UTMA account can be an option for those who want more oversight
In New York, if the amount of the inheritance is under six figures, you might consider creating a Uniform Transfer to Minors Account (UTMA). These specialized accounts hold assets for children while also allowing for appropriate withdrawals by a caregiver or guardian to cover the child’s needs.
For those leaving behind a smaller inheritance who want to maximize the protections for their children, a UTMA could be the best solution.
A trust can help ensure your children receive something as adults
Creating a trust can protect inherited wealth for your children. You may permit their guardian to make limited withdrawals or set up a secondary financial resource while your children are minors. The primary inheritance won’t be accessible until your children become adults if that is how you structure the trust.
A trust can help ensure that your children will have resources when they become adults. In fact, a trust can even give you more authority over the use of those assets when your children gain access to the trust.
Considering your family circumstances and assets in depth can give you a better idea of which of these three systems might be the best basis for your estate plan.