Recent headlines surrounding the estate of former One Direction singer Liam Payne have prompted many people to ask an important estate planning question. According to published reports, Payne’s 9 year-old son is expected to inherit his father’s estate, but because he is a minor, he cannot simply receive and manage those assets himself.
While most families won’t be planning for a multi-million-dollar estate, the legal issue is exactly the same.
One of the most common misconceptions I encounter is the belief that parents or grandparents can simply leave their assets directly to a minor child without any additional planning. In reality, although a minor child can inherit property in North Carolina, the law generally requires an adult to manage that inheritance until the child reaches adulthood. Without proper planning, that often means additional court involvement, added expense, and less control over how and when the child ultimately receives the inheritance.
Understanding this distinction is one of the most important and often overlooked aspects of estate planning.
What Happens If You Leave Assets Directly to a Minor Child?
If a minor child is named as the beneficiary of an estate or receives property through intestacy (when there is no will), the child is still legally entitled to inherit.
The problem is that, because the child is under the age of majority, they generally cannot take legal control of those assets themselves.
Depending on the type and value of the property, this may require the court to appoint someone to manage the inheritance until the child reaches adulthood. That process can involve additional expense, ongoing court oversight, periodic accountings, and restrictions on how the funds may be used.
In many cases, this is exactly what thoughtful estate planning is designed to avoid.
It’s Not Just Your Will
This issue extends beyond wills.
Many assets pass outside of probate through beneficiary designations, including:
- Life insurance proceeds
- Retirement accounts
- Transfer-on-death or payable-on-death accounts
- Investment accounts
Naming a minor child directly as the beneficiary of these assets can create the same practical problems.
Simply listing your child on a beneficiary form does not eliminate the legal limitations that come with being in the minority.
A Better Approach
Rather than leaving assets directly to a minor child, many estate plans use legal tools that allow a trusted adult to manage the inheritance until the child reaches an age you determine.
Depending on your family’s circumstances, this may include:
- A testamentary trust created in your will
- A revocable living trust
- A custodial account established under applicable law
- Other planning strategies tailored to your goals
These options can allow you, rather than the court, to decide who will manage your child’s inheritance, how the money may be used, and when your child should receive full control.
Reaching Age 18 May Not Be the Best Time
Many people assume that once a child turns 18, they are ready to receive a substantial inheritance.
Legally, adulthood begins at 18, but financial maturity often develops much later.
Through proper estate planning, you may choose for assets to remain in trust until your child reaches an age you believe is appropriate, such as 25, 30, or even later. In the meantime, the trustee can use the funds for education, healthcare, housing, and other purposes you authorize.
Estate Planning Is About More Than Deciding Who Gets Your Property
A well-designed estate plan does more than identify beneficiaries.
It also addresses how and when your loved ones receive their inheritance.
If you have minor children, grandchildren, or other young beneficiaries, careful planning today can help avoid unnecessary court involvement and ensure your assets are managed according to your wishes until they are ready to take control themselves.
The best gift you can leave your family is not just an inheritance. It is a plan.
