It is common knowledge that if one dies without any estate planning (will or trust), their heirs would be able to inherit outright if they are over the age of majority – age 18. But, most agree that 18-year-olds may not be fully capable of managing financial assets and/or real estate.

Placing a TOD (Transfer on Death) Beneficiary Designations on your savings or brokerage accounts prevents such accounts from triggering Probate Administration and avoids the cost and delay of Probate, by having the account balance paid in full to your named beneficiary (who has attained age 18). If a beneficiary is under 18, they will not have access to these funds unless a Guardianship Estate is set up by the court for them.

But this may still not be the best way to pass an inheritance on to your heirs, if they are young, or if they are not mature enough to manage money or property wisely and responsibly.

And, while you can provide for a Testamentary Trust to be set up for a minor in your Will, that Will would still need to undergo Probate administration, and have such Testamentary Trust set up by the court. This will take time and significant expense.

The most practical and efficient way to leave assets for the benefit of minor or young beneficiaries, is to set up a Living Trust, name a Trustee for the Minor's share in the Trust, and provide for distribution to such minor over time – either by specifying an age of outright distribution older than 18 (for example – 25 or 30), or – especially for larger estates – provide for “tiered” distributions.

Tiered distributions involve doling out the money in stages, and usually, each stage includes an incentive: for example – 30% upon obtaining an undergraduate Degree, 30% upon obtaining a Graduate Degree, and the Balance – well – that is up to you to decide when the best time to distribute the rest is.

Setting up gradual (tiered) distributions in combination with incentives (requirements for the beneficiary to accomplish certain goals) is not only a way of motivating your beneficiaries to “earn” their inheritance, but also a means to “teach” them money management a little bit at a time, while still safeguarding the bulk of their inheritance under the control of the Trustee you appointed for their share in your trust. It is a gradual introduction to wealth management that is tied to a show of responsibility and accomplishments on the part of the beneficiary. It is a much better way to pass on your assets, compared to an outright distribution at age of majority (or above). This way, not only will your beneficiaries receive the inheritance, but they will also have the time and opportunity to master the life-skills to manage it.