On March 31, 2019 the Black Community lost a beloved artist, philanthropist, leader, and father. R.I.P Nipsey Hussle. Nipsey was a father to two young children and was unmarried at the time of his death. If he had no Estate Plan in place, his assets would pass to his two young children.
What Happens When Children Inherit Large Sums of Money?
When a minor receives property or money, the minor is unable to have the authority to take control of that property or those finances until he or she reaches the age of 18 or the age of majority in that state. Minors cannot legally enter any contract or receive property until they are adults.
If the value of the assets left to a minor exceed a certain state threshold (i.e. $15,000 in the State of Georgia) a court-supervised conservatorship must be established for the benefit of the minor.
A judge would ensure that a conservator is appointed on behalf of the minor to manage the inheritance when a probate estate has been opened. A judge would decide who to appoint as the minor’s guardian and conservator. Sometimes the person is a third-party attorney appointed by the court. Sometimes, the child’s parent is chosen unless both parents are deceased or otherwise determined to be inappropriate.
What is the Role of a Conservator?
The court appointed conservator would be responsible for:
Investing and Managing the Minor’s Assets
The conservator will decide where the minor’s liquid assets should be held and who will be responsible for overseeing their investment. If the minor inherits real estate, the conservator will be responsible for paying all expenses of maintaining the property, such as taxes, mortgages, and insurance.
Paying for the Minor’s Health, Education, and Maintenance
The conservator is responsible for paying for the health, education, and maintenance of the minor. This includes medical bills, clothing, food, school tuition, summer camp, and vacations. This is done with the inheritance.
Preparing and Filing Income Tax Returns
The conservatorship estate assets are typically invested to produce income to take care of the minor’s needs. The conservator must prepare and file a yearly income tax return on behalf of the minor and pay any taxes that may be due.
Deciding Where the Minor Will Live
The conservator may have to decide where the minor will live if the parents are no longer living. The child’s home would most likely be with their physical guardian, who does not necessarily also have conservatorship over his inheritance.
Filing Annual Court Accountings
The conservator is responsible for filing with the court, accounting records of how the minor’s assets have been bought, sold, invested, and spent each year.
The conservator must file a final accounting of the minor’s assets when the minor reaches the age of majority, usually 18. The conservatorship is then terminated, and the remaining assets are distributed to the ownership of the minor, now an adult and legally able to hold and own his property.
It is always best to have an Estate Plan in place to avoid as much court interference as possible. Probate litigation can become costly and ultimately leave major decisions in your child’s life to a stranger, a judge.
from the lawyer next door,
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