Can Minors Inherit? Understanding Beneficiary Designations for Children

When planning for your family’s future, one question often arises: Can a minor legally inherit property or money? The short answer is yes—but there are important limitations and considerations. Without proper planning, leaving an inheritance to a child under 18 can trigger court involvement, delays, and even jeopardize government benefits.

In this post, we’ll break down everything Colorado parents and guardians need to know about leaving assets to minors—along with the best strategies to safeguard their future.

Have questions about estate planning for your children? Call our office at 970-893-8857 to schedule an estate planning consultation.

Can a Minor Receive an Inheritance?

Yes, minors (children under age 18) can inherit money or property—but they can’t legally control it. That means if you leave assets directly to a child, a court will likely have to appoint a guardian to manage those assets until the child turns 18. This can lead to:

• Costly legal fees
• Delays in access to funds
• Court supervision over how money is used
• Potential disagreements among family members

Without a plan, even a modest inheritance can turn into a complicated legal mess.

Protect your child’s future with a clear estate plan. Contact us at 970-893-8857 to schedule a consultation with an experienced estate planning attorney for minors.

Why Can’t Minors Manage Their Own Inheritance?

Under Colorado law, minors cannot legally enter binding contracts, hold title to real estate, or manage financial accounts on their own. This is because:

• Children may not have the maturity to handle large sums of money
• They are legally restricted from signing certain documents
• Their assets could be mismanaged or targeted without adult oversight

That’s why courts and financial institutions require a custodian, trustee, or guardian to manage assets on the child’s behalf.

What Happens If I Leave an Inheritance Directly to a Minor?

If you name a minor directly as a beneficiary—for example, on a life insurance policy or retirement account—the assets will not pass to them outright. Instead:

• A probate court will need to appoint a guardian of the estate
• The guardian will manage the assets until the child turns 18
• Once the child turns 18, they receive full control of the money—no matter how large the amount

This means a teenager could inherit hundreds of thousands of dollars at once with no financial experience.

Don’t leave your child’s financial future to chance. Call 970-893-8857 to learn how to structure your estate plan properly.

What Is the Best Way to Leave an Inheritance to a Minor?

The most effective ways to leave an inheritance to a minor include:

Creating a Trust

A trust allows you to:

• Appoint a trustee to manage the assets
• Specify how and when the money is distributed
• Delay access to funds until a more appropriate age (such as 25 or after college)
• Provide for expenses like education, health care, and living costs in the meantime

You can create a revocable living trust that you control during your lifetime, or an irrevocable trust for greater asset protection.

Designating a Custodian Under the UTMA

Colorado recognizes the Uniform Transfers to Minors Act (UTMA), which allows you to:

• Transfer assets to a custodial account for a minor
• Appoint a custodian to manage the money until the child turns 21
• Avoid court involvement for smaller gifts or inheritances

However, once the child turns 21, they gain full access—regardless of maturity.

At What Age Should a Child Receive Their Inheritance?

There’s no universal “right age,” but some common benchmarks include:

• Age 18 – Legal age of majority, but often considered too young for large inheritances
• Age 21-25 – Young adults may be more financially responsible by this age
• Milestones – Such as graduating college, getting married, or buying a first home

With a trust, you can even structure staggered distributions, such as:

• 25% at age 21
• 50% at age 25
• Remaining balance at age 30

This allows time for maturity while still providing support.

Talk to an estate planning attorney at 970-893-8857 to choose the best age and structure for your family.

What if the Minor Has Special Needs?

If your child has a disability or receives government benefits like SSI or Medicaid, receiving an inheritance outright could disqualify them from crucial government assistance.

In this case, you can establish a Special Needs Trust (SNT) to:

• Hold assets without impacting benefits eligibility
• Designate a trustee to manage the funds
• Pay for supplemental needs like therapies, equipment, education, or travel

This allows your child to maintain public benefits while still benefiting from the inheritance.

Can an Inheritance Disqualify a Child from Government Benefits?

Yes. Programs like:

• Medicaid
• SSI (Supplemental Security Income)
• SNAP (food assistance)
• TANF

have strict income and asset limits. An inheritance—even a small one—can push a child over those limits, causing disqualification.

Proper planning with a trust or custodial account can avoid this outcome.

What If Something Happens to Both Parents?

It’s essential to name alternate beneficiaries and contingent guardians in your estate plan. This ensures that:

• There’s someone you trust to raise your child
• Your child’s assets are managed according to your wishes
• Your family avoids unnecessary conflict or court intervention

What Should Be Included in an Estate Plan for Children?

At minimum, your plan should include:

• A will naming a guardian for your minor children
• A trust to manage assets on their behalf
• Beneficiary designations that coordinate with your trust
• Powers of attorney and health care directives for yourself
• Special needs planning (if applicable)

Schedule a consultation with our estate planning team at 970-893-8857 to start building a plan that protects your children’s future.

Protect Your Child’s Future Today – Schedule A Consultation With An Experienced Colorado Estate Planning Attorney.

Minor children can inherit—but how they inherit is critical. With thoughtful planning, you can ensure:

• Responsible asset management
• Continued government benefits eligibility
• Support for their education and development
• Protection from exploitation or impulsive decisions

Whether you’re new to estate planning or updating an existing plan, our team is here to help.

Call 970-893-8857 today to schedule a confidential consultation with a dedicated estate planning attorney for minors.