How to Transfer Property to Minors through Your Estate Plan

Naperville estate planning attorneys, estate guardian, appoint a guardian, transfer property to minors, custodial propertyWhile Illinois law permits minors to hold title to property in their own name, they lack the capacity to enter into contracts or to transfer assets. For that reason, a guardian typically holds the title to a minor’s assets. Or, alternatively, the property is held in trust on the minor’s behalf. These two options are important to keep in mind when creating your estate plan, especially if you have children.

Appointing an Estate Guardian for a Minor Child 

Parents may name an estate guardian for their minor child (and also a personal guardian) in a will. If a specific person is not named, the court will appoint a guardian during probate. The proposed guardian must be capable of performing the guardianship role, and he or she must also:

  • Be at least 18 years old (this means that an older sibling who is also a minor may not serve as a guardian);

  • Be a resident of the United States;

  • Be of sound mind;

  • Not be an adjudged disabled person; and

  • Not be a convicted felon, unless the court determines that the appointment of this person would be in the child’s best interest (depending on the nature of the offense and any potential threat to the child).

The appointed estate guardian may differ from the appointed personal guardian. The law permits minors who are 14 years old or older to nominate their own guardian(s). The court must approve this nomination. If the court does not approve—or if the minor declines to make a nomination—the court will appoint a guardian or guardians.

Transferring Trust Property to a Custodian on a Minor’s Behalf

If the property is held in trust for a minor, the assets may be transferred to a custodian on the minor’s behalf. This custodian would typically be named in the trust instrument or designated by the trustee (the person administering the trust). Illinois law only permits a single custodianship. This means that only one person can be the custodian for one minor. Once designated a custodian, you must fulfill certain obligations, including:

  • Taking care of custodial property;

  • Registering or recording title to custodial property, when it is appropriate; and

  • Collecting, holding, managing, investing and reinvesting custodial property.

One point in designating a custodian is so that custodial property may be managed without court intervention. In that vein, the custodian may pay to, or spend on behalf of, the minor, as much of the property as the custodian deems advisable. Non-custodial property—which means any other income of property that is available to the minor—is irrelevant. The custodian does not have to consider alternative means of income that the minor might have access to.

Property custodians have powers and attendant responsibilities in addition to those discussed above. The extent of the custodial role, as well as guardianship and trust creation, should be considered when you design an estate plan with children in mind. Because you have so many options it is important to consult an attorney. Our experienced Naperville estate planning attorneys will help you craft a plan that works for you. We want to help you preserve your family’s future. Contact us today for a consultation.