Why a Minor Child Can’t Directly Inherit Money
We love our kids and want them to be safe and secure, no matter what happens. When it comes to your money and assets, naturally, most parents (and grandparents) may think, “If something happens to me, I’ll just leave it to them.” But here’s the thing: the law doesn’t allow a minor to own, inherit, or manage money.
If your child is named as a beneficiary or inherits anything directly, you — even as their parent — can’t simply step in and take charge. For example, if grandma or grandpa wants to leave your kid (their grandchild) money directly for college when they pass away, it can completely backfire and turn into a disaster.
Kids under the age of 18 are not allowed to own property. They’re not old enough in the eyes of the law. So, if a child is left as a beneficiary, or is named in your parents’ Will to receive assets, that will result in a minor’s guardianship. In Illinois, that would require you to hire an attorney and file a petition for guardianship. You would have to appear before a judge, prove you are qualified to handle your own child’s money, and then get involved in a legal case for anywhere from a few months to a year. The end result is most likely the transfer of your kid’s inheritance into a restricted account, with you appointed as guardian of the estate. You will then not be allowed to freely use this money, as it will be locked up, and any access will be restricted without a court order. Then, when your child turns 18, it will instantly become their property to spend however they want.
A court shouldn’t decide how your child’s inheritance is spent — you should.
(You can see more on what this process looks like on the official Illinois Courts’ Guardianship Information page.)
What Guardianship of the Estate Really Means
Being guardian of the estate isn’t like being a parent — it’s a legal role with strings attached. You’re accountable not just to your child, but to the court.
- If the court allows you access to the funds, you will be required to file annual reports showing every dollar spent.
- Some expenses require the judge’s approval before you can use the funds.
- You can’t treat the inheritance like family savings—the court decides how it can be used.
- Depending on the count you are in, you most likely won’t even have access as the judge will require the funds to be placed in a restricted account.
The Bond Requirement
Most courts also require a bond — essentially an insurance policy that protects the child’s money if the guardian mishandles or runs off with the funds. The bond amount is often equal to the total value of the child’s inheritance.
That means:
- Premiums eat away at the inheritance or come out of pocket as an expense.
- If your credit isn’t strong, you may not even qualify for the bond.
- If you don’t qualify, the court may appoint someone else to manage your child’s money instead.
Think about that. Your child’s money, managed by someone you didn’t choose, simply because of how the system works.
What an UTMA Account Means for a Child’s Inheritance
Sometimes, the court may require funds to be placed in a Uniform Transfers to Minors Act (UTMA) account.
That means:
- An adult custodian manages the account until your child comes of age.
- The money can only be used for your child’s benefit, within the parameters of the UTMA rules.
- At 18 (or 21 in some states), your child receives it all, no strings attached.
While an UTMA account can sometimes avoid ongoing court reporting, it doesn’t solve the bigger problem: your child still receives full control of the money far too young.
UTMA in addition to Guardianship
In some cases, the court doesn’t choose between guardianship and UTMA—it requires both. That means:
- You may still have to serve as guardian, file reports, and post a bond.
- At the same time, the funds sit locked in an UTMA account you can’t touch without permission.
The gift of an inheritance should lead to opportunity and a gift to improve the life a child, not red tape and restrictions.
What Happens at 18
Whether through guardianship, UTMA, or both, the outcome is the same: your child gains full control of the money the moment they reach adulthood. For most 18-year-olds, that’s too much responsibility, too soon. A college fund or a nest egg for their future can vanish overnight.
Why a Trust is Better Than Naming a Child as Beneficiary
Here’s the good news: you don’t have to settle for guardianship, UTMA restrictions, or a sudden payout at 18. With a Trust, you choose the path forward.
- You decide who manages the money, not the court.
- You avoid the need for court involvement, guardianship, bonds, or restricted accounts.
- You set guidelines for how funds can be used: education, housing, healthcare, and experiences that enrich your child’s life.
- You decide when your child is ready for more responsibility or to receive their inheritance, whether gradually, at milestones, or in ways that reflect your family’s values.
A Trust isn’t rigid. It’s flexible, personal, and built to fit your family. To see how a Trust compares to leaving assets outright, check out our article on why a revocable living trust may be the right choice for your family.
The Bottom Line
Naming a child outright as a beneficiary, or the back-up after your spouse, might feel simple and seem like the natural thing to do, but it creates unintended and avoidable complications: guardianship proceedings, bonds, possible UTMA restrictions, and the risk of your child receiving too much money before their ready to responsibly manage it.
A Trust, on the other hand, is tailored to your specific circumstances and your child’s maturity. It keeps your family out of court, protects your child, and ensures the legacy you leave is behind one of responsible parenting, thoughtfulness, and protection — not red tape and regret.
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This article is a service of Family Wealth & Legacy Legal Solutions (FWLLS). At FWLLS, we do not just draft documents; we ensure you make educated, informed and empowered decisions for yourself and the people you love. That’s why we offer a Family Wealth & Legacy Strategy Session™, during which you will get educated and begin to prepare to avoid life’s most common legal problems and get a plan in place to make the best possible choices for the people you love. You can begin by calling our office today to schedule a Family Wealth & Legacy Strategy Session and mention this article to find out how to get this $900 session at a significantly discounted rate, or even for free.