Every adult should have a will as part of even the most basic estate plan.  When a person dies intestate, meaning without a will, state law determines who will inherit their property. When a child is adopted, the adoption decree normally severs the parent-child relationship between the adopted child and the natural parents including their inheritance rights.

There are exceptions to this rule in other states, for example:

• In Kansas, Louisiana, Rhode Island, Texas, and Wyoming, an adoption decree terminates the right of the birth parent to inherit from the adopted person, but the adopted person may still inherit from the birth parent.
• Illinois allows the birth parents to acquire from the adopted child’s estate any property gained from them through gift, will, or under intestate laws.
• In Pennsylvania, an adopted person may inherit from the estate of a birth relative, other than a birth parent, who has maintained a family relationship with the adopted person.

The adopted child is treated by law as the natural child of the adopting parents when the adoption decree is finalized. The adopted child gains the right to inherit from the adoptive parents as well as the adoptive parents’ relatives. Adoptive parents and other adoptive relatives also gain the right to inherit from the adopted child.

What about step children? If they are not adopted by their stepparent, they do not normally inherit from their parent’s spouse if there is no will. This can create some unexpected and unfortunate results, making estate planning essential when a family is ‘blended.’

As you can see, state laws regarding adoption, birth families and inheritance rights can be complex, so it is important to work with an estate planning attorney to address specific issues and questions.

Mark S. Eghrari & Associates, PLLC is a member of the American Academy of Estate Planning Attorneys.

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Minor children can be named as beneficiaries of your estate, but if the children are still minors at the time of your death, a conservator will have to be named to manage the inheritance until the children reach legal age.

This is different from naming a guardian – although the same person can do both jobs. A guardian is responsible for looking after the day-to-day care of your kids if you’re not around. A conservator on the other hand, is responsible for overseeing the assets owned by the children until they reach the age of majority.

To help control how the money is spent, there are a few different types of estate planning tools you can use.

Leaving Assets in a Restricted Account

This method is very useful for small inheritances. These accounts earmark the money for certain expenses that benefit the minor. For example, a 529 account would be used to pay for the minor’s college education or, if you want something with a little more flexibility, you could deposit the funds into a Uniform Transfers to Minors Act (UTMA) or Uniform Gifts to Minors Act (UGMA) custodial account, which are used to provide for the health, education and maintenance of minor children.

Leaving Assets in Stages

This option calls for transfer of a minor’s inheritance to a trust while giving directions as to the release of the funds or property in different stages. These stages can be linked to a minor’s age or accomplishing certain milestones. Keep in mind that this option will require a trustee to oversee the account and ensure the terms are met.

Leaving Assets in a Life Time Trust

This option involves leaving a minor’s inheritance in a trust for their life time. The major advantage in this case is that the assets held in the trust remain protected from lawsuits and divorces.

Various types of trusts can be created to establish a dynasty legacy to avoid estate taxes and carry over the benefits of the inheritance for several generations. The use of a third party trustee can help save the inheritance from outside influences or even the bad decisions of the beneficiary himself. However, this option also involves maintenance related costs and trustee fees for the term of the trust.

To learn more about leaving an inheritance to minor beneficiaries, you should consult with a qualified estate planning attorney.

Mark S. Eghrari & Associates, PLLC is a member of the American Academy of Estate Planning Attorneys.

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