Inherited Money on Behalf of a Minor Child? Here’s What to Look for in a Financial Advisor
When an inheritance involves a minor child, whether you’re a parent managing assets left directly to your child, or a grandparent, guardian, or trustee responsible for funds set aside for one, the decisions aren’t just financial. They come with legal structures, timelines, and responsibilities that don’t apply to an inheritance received on your own behalf. If you’re trying to figure out how to handle this correctly, that’s exactly the right question to be asking early.
What changes when a minor is involved
A minor generally can’t hold significant assets directly in their own name, which means an inheritance intended for a minor child typically has to pass through a specific legal structure, a custodial account under UTMA or UGMA rules, or a minor’s trust, each with its own rules about how the money can be used, who controls it, and when the child gains control of it outright. That last point matters more than it might seem: custodial accounts under UTMA/UGMA typically hand full control to the child at a set age, often 18 or 21 depending on the state, whether or not that’s the right time for a given child to manage a significant sum on their own.
There’s usually no need to rush this. Beyond specific legal deadlines tied to how the inheritance was structured, most of these decisions benefit from careful planning rather than a fast resolution.
What to look for in an advisor for this specific situation
A few things matter more here than in a typical advisor search:
- Experience with custodial accounts and minors’ trusts. UTMA, UGMA, and trust structures each have different rules for control, distribution, and the age at which a child gains full access, and the right structure depends on the specific situation, not a one-size-fits-all default.
- Comfort coordinating with an estate attorney, since the legal structure holding the inheritance is often set up or reviewed by an attorney, and the investment approach needs to work within whatever that structure allows.
- A long-term view, not just an initial setup. These arrangements often span many years until a child reaches the relevant age, which means the advisor relationship needs to be built for continuity, not a single transaction.
- A fiduciary standard. When managing assets on behalf of a child who can’t yet advocate for themselves, it’s worth knowing whether the advisor is legally required to act in the client’s best interest. As a parent, guardian, custodian, or trustee, you have your own responsibility to manage the money for the child’s benefit, and an advisor held to a fiduciary standard can support that role with advice in your best interest, not their own. That duty is ongoing, covering how the assets are monitored over the years until the child gains control, and it requires the advisor to disclose any conflicts of interest, such as how they’re compensated, so you can make informed decisions on the child’s behalf.
How Apriem approaches inheritances involving minor children
Apriem coordinates investment management, tax planning, and estate planning as one ongoing relationship, which matters here because decisions about a custodial account or minor’s trust touch all three, how the assets are invested, the tax treatment of the account, and how the legal structure is set up to serve the child over time. As an independent fiduciary, Apriem’s recommendations are held to an on-going best-interest standard.
That coordination typically means working alongside the family’s estate attorney to make sure the investment approach fits within whatever legal structure is already in place, or is being newly established.
Questions worth asking before you commit
Whoever you work with on this, these are worth asking directly:
- Has this advisor worked with custodial accounts or minors’ trusts before, and can they explain the difference between the options?
- Will the advisor coordinate directly with our estate attorney on the legal structure, or expect me to relay information between them?
- How does the advisor think about investing for a timeline that may span a decade or more, until the child reaches a certain age?
- Is the advisor a fiduciary at all times, or only in certain parts of the relationship?
