Common Mistakes When Leaving Assets to Minor Grandchildren
It’s a natural instinct—wanting to leave a financial gift to your grandchildren. Whether it’s savings, life insurance proceeds, or a family property, grandparents often see it as a meaningful way to support the next generation. But when those grandchildren are minors, well-intentioned plans can unintentionally trigger legal complications, unnecessary court supervision, and family stress.
Here’s what you need to know about common missteps and how to avoid them.
Mistake #1: Naming a Minor Grandchild as a Direct Beneficiary
One of the most common mistakes is naming a grandchild directly as a beneficiary on a Payable-on-Death (POD) account, life insurance policy, or retirement account. While it might seem like a simple solution, California law does not allow minor children to directly control inherited assets.
What happens instead?
A court must step in to appoint a guardian of the estate—someone who will manage the funds on behalf of the child until they reach 18. This process is not only public and time-consuming, but also expensive. Once the child turns 18, they gain full control over the entire inheritance, no matter how large or how prepared they are to manage it.
Mistake #2: Not Planning for Contingencies
Let’s say you’ve listed your adult children as beneficiaries, thinking the assets will eventually pass to your grandkids through them. But what if something happens to your adult child first? Without the right legal structure in place, your grandchildren may inherit by default—with no protections or clear guidance in place.
A well-crafted estate plan should always consider “what if” scenarios. Planning for multiple generations, and using tools like testamentary trusts, ensures that your legacy is secure, no matter what.
Mistake #3: Overlooking Trust Structures
The best way to leave assets to minor grandchildren is through a properly designed trust. A trust allows you to:
Appoint a trusted adult as the trustee
Set specific rules on how and when funds should be used
Delay full control until a more appropriate age (e.g., 25 or 30)
Avoid court intervention altogether
In California, creating a Revocable Living Trust or incorporating testamentary trust provisions in your will is often the safest and most flexible route. These legal tools protect your assets and your grandchildren’s future.
Mistake #4: Assuming Your Will Is Enough
Even if your will mentions your grandchildren, it may not be enough to protect their inheritance. Wills go through probate, and California probate courts may still require a guardian of the estate to oversee any assets left directly to a minor.
By contrast, a trust bypasses probate entirely and provides immediate direction and control.
Mistake #5: Not Communicating with Your Family
Estate planning is more than documents—it’s about intention, clarity, and communication. Failing to let your children or trustees know your goals can lead to confusion, conflict, and mismanagement.
Work with an experienced estate planning attorney to put your wishes into writing—and make sure everyone involved understands their role.
Planning Ahead Means Peace of Mind
Leaving a legacy for your grandchildren is a beautiful act of love, but doing it right requires more than good intentions. With proper planning, you can:
✔ Avoid court involvement
✔ Protect your grandchildren’s future
✔ Ensure responsible management of assets
✔ Leave a legacy that reflects your values
If you’d like to learn more about trust options or how to protect your grandchildren’s inheritance, visit our blog archive at terrihilliard.com/blog
DISCLAIMER: The content contained herein is for general informational purposes only. These materials do not constitute legal or other professional advice. We do not accept any responsibility for any loss that may arise from reliance on this information. No reader should act or refrain from acting based on information contained in this article without seeking advice of counsel.