WHEN MINORS INHERIT PROPERTY
An issue that we sometimes handle in an estate administration or following a death is the inheritance of property by a minor child. The issue may arise with real property or personal property, such as stocks, bonds, cash or life insurance or with tangible personal property, such as jewelry, household effects, vehicles and so forth.
Most states’ laws recognize that a minor, generally someone under the age of eighteen (18) years old, does not have the “legal” capacity to handle and manage his or her own property. So many states’ laws provide that the inheritance of anything of value beyond a certain dollar amount of must be handled and dealt with on behalf of the minor by an appropriate and authorized person.
In South Carolina, the authority to handle and make decisions involving the property and financial affairs of a minor child falls within the jurisdiction of the Probate Court. And exactly just how much Probate Court involvement may be required with a minor’s property often depends upon whether or not any type of pre-planning was done in advance of the minor receiving or inheriting the property.
In many cases, a minor child unexpectedly inherits property from a parent who has died unexpectedly in an accident or by illness. The parent may or may not be survived by a spouse and one or more other children. If a parent dies in South Carolina and does not have a Last Will and Testament, then the parent’s minor child or children, no matter how many children and regardless of whether or not there is a surviving spouse, inherits some or all of the deceased parent’s “probate” property, both real and personal.
If there is a surviving spouse, the minor child receives and shares one-half of the deceased parent’s probate property with all other children. If there is no spouse, then the minor child receives and shares 100% of the probate property with all other children. Probate property may include real estate, bank accounts, stocks, bonds, tangible personal property such as vehicles or mobile homes, or other property or assets owned by the deceased parent.
In the past, I have written about the difference between probate and non-probate property. I have also discussed the importance of having a Last Will and Testament. When a person who owns probate property dies with no Will there is generally greater involvement and oversight by the Probate Court. Add to that mix a minor child and the estate becomes more complicated, more expensive and more time-consuming; not by the existence of the minor children who inherit a portion of the parent’s estate but by the lack of pre-planning on the parent’s behalf by dying without a Will (and, in some unfortunate events, by dying with the lack of a GOOD Will).
Another situation that often arises is when a child inherits property because a grandparent dies and leaves an inheritance in their Will to their grandchild who is a minor when the grandparent dies. Oftentimes the grandparent did not leave any of his estate to his grandchild but rather the grandchild’s parent died before the grandparent and the child’s share passes on down to the child’s child or children. Proper planning by the grandparent who had the forethought to prepare a Will with an experienced estate planning attorney can eliminate complicated court proceedings because of the unplanned inheritance by the minor child. If not, then the complicated court proceeding cannot be avoided.
A minor child may also inherit or be entitled to receive property (in most cases, money) when a parent dies because of an accident through their employment or from a motor vehicle accident. These types of deaths often involve a worker’s compensation case or a wrongful death case. Based upon applicable state laws, at least some portion of a worker’s compensation or wrongful death claim is usually payable to the deceased person’s children even if there is a Last Will and Testament or a surviving spouse.
It is often thought that a person cannot take steps to avoid some of the difficulties that result when minor children are involved in these types of cases. But there are some planning opportunities available that can assist in reducing the involvement or the length of involvement of the Probate Court in these cases.
Another situation where a minor child may receive property, also usually money, is when the minor child is himself or herself injured because of an accident and the minor child receives compensation for his or her personal injuries. Unless the monies are less than $2,500, some type of Probate Court involvement is necessary to approve the settlement of the child’s personal injury claim and, if the amount received exceeds $10,000, further Probate Court involvement and oversight is required to appoint and authorize someone to handle, safeguard and protect the money received until the minor attains the age of eighteen (18). Again, there are opportunities that allow flexibility for these cases.
A death of a parent or other loved-one might also trigger payment of life insurance proceeds to a minor child. Without proper advance planning, any life insurance proceeds in excess of $10,000 will necessitate extended involvement and oversight of the minor’s funds by the Probate Court. Again, good planning can eliminate the Probate Court’s involvement.
In many of these situations discussed above, the minor child receives or inherits property as a result of a foreseen or intended event. But it can also happen as a result of lack of planning on the parent’s or grandparent’s part. It happens because someone who didn’t expect to die before they had a chance to properly plan for their minor children kept putting off until tomorrow what they should have taken care of a long time ago or because other contingencies were not considered. In most of these situations, pre-planning can greatly reduce the time, costs and complexities involved when no planning is done, and in most of these cases, planning can help and, in some cases, completely avoid court involvement and oversight.
(The information provided in this article is for informational purposes only and is of a general nature. The information should not be construed as legal advice. If you have any questions about the subject matter of this article or related matters, you should consult with a professional advisor for advice. Deirdre W. Edmonds previously served for twelve years as Horry County Probate Judge and is currently the owner of The Law Office of Deirdre W. Edmonds, PA, located at 1500 Highway 17 North, The Courtyard, Suite 213, Surfside Beach, SC 29575. The Law Office of Deirdre W. Edmonds, PA focuses on estate planning, probate administration, probate and trust litigation, disability planning and elder law. Contact Deirdre W. Edmonds via Telephone: (843) 232-0654; Website: www.dedmondslaw.com; and Email: dedmonds@dedmondslaw.com.)