Property Managers for Young People's Property

When making a will using WillMaker, you'll have a chance to set up property management for your young children as well as for any other young beneficiaries of your will.

Types of Property Managers in the WillMaker Will

There are four types of property management you can set up in Nolo's will, and each requires that you name a property manager. Here are the types of property managers.

  1. Property guardian. Minor children can't legally manage substantial amounts of property. So you can name a property guardian for that job. The property guardian looks after property that your minor children already own or come to own (through inheritance or income, for example) if that property doesn't come with its own property management, like in a trust.
  2. Trustee of a child's trust. You can set up a child's trust for any of your beneficiaries who are under age 35. The trustee will manage any property the young person receives through your will.
  3. Custodian of an UTMA. You can set up an account under the laws of the Uniform Transfers to Minors Act for any young beneficiary, up to age 18-25 (depending on the state). The custodian will manage any property the young person receives through your will.
  4. Trustee of a pot trust. If you have more than one child and one of those children is under age 25, you can set up a pot trust in your will. The pot trust will contain all of the property you leave to be shared by your children. The trustee will manage that property as a whole, for the benefit of the children as a group (so not necessarily divided evenly).

You can learn much more about each of these types of property management in WillMaker's legal manual.

Choosing a Property Manager

No matter which types of property management you choose to include in your will, choosing a property manager is an important decision.

Name someone you trust, who is familiar with property management and who shares your attitudes and values about how the money should be spent. As a general rule, name a trusted adult who lives in or near to the state where the property will be managed—or is at least willing to travel there if needed.

You need not worry about finding a financial wizard to be your property manager because that person will have the power to hire professionals to prepare accountings and tax returns and to give investment advice. Anyone hired for such help may be paid out of the property being managed. The main job is to manage the property honestly, make basic decisions about how to take care of the assets wisely and sensibly mete out the money to the trust beneficiary.

It is usually preferable to combine the personal care and property management functions for a particular minor child in the hands of one person. Think first who is likely to be caring for the children if you die, and then consider whether that person is also a good choice for property manager.

If you believe that the person who will be caring for the minor is not the best person to handle the minor's finances, consider another adult who is capable and is willing to serve. If you must name two different people, try to choose people who get along well because they will have to work together.

For property you leave to young adults who are too old to have a personal guardian, select an honest person with business savvy to manage the property.

EXAMPLE: Orenthal and Ariadne agree that Ariadne's sister, Penny, should be guardian of their kids should they both die, but that the $200,000 worth of stock the three kids will inherit might better be handled by someone with more business experience and who will be better able to resist the children's urgings to spend the money frivolously. In each of their wills, they name Penny as personal guardian of the children, but also create trusts for the property they are leaving to their children. They name each other as trustees and Orenthal's mother, Phyllis, who has investment and business knowledge and lots of experience in handling headstrong adolescents, as the alternate trustee, after obtaining her consent. Orenthal and Ariadne also decide that one of their children, who is somewhat immature, should receive his share of the estate—at least the portion not already disbursed for his benefit by the trustee—upon turning 25, and the other two children should get their shares when they turn 21.

Naming Your Child's Other Parent

You may be surprised to learn that your child's other parent probably will not be able to automatically step in and handle property you leave your children in your will. Rather, unless you provide for management in your will, that other parent usually will have to petition the court to be appointed as the property manager and then handle the property under court supervision until the children turn 18.

So, if you want your children's other parent to manage the property you are leaving your children, name that person to manage your children's property.

However, keep in mind that it only makes sense to name your child's other parent if you expect that person to be alive when your child receives the managed property through your will. In other words, if you set up your will so that your children get your property only if your spouse dies first, it doesn't make sense to name your spouse to manage that property.

This particular issue doesn't apply to property management of property not passed through your will (that is, when you name a property guardian for your minor children). So it usually makes sense to name your child's other parent for that job.

Whomever you choose, it is essential to get his or her consent first. This will also give you a chance to discuss, in general terms, how you would like the property to be managed to be sure the manager you select agrees with your vision and fully understands the beneficiary's needs.

Naming an Institution

When naming a property guardian and trustees, it is generally possible to name an institution as property manager. (Naming an institution is not possible when naming an UTMA custodian.) However, it's usually not advisable, and WillMaker does not allow it. Here's why:

Here's why:

  • Naming an institution as trustee is expensive.
  • An institution is likely to require its own language in the appointing document.
  • An institution is unlikely to understand a child's needs well enough to make the best decisions when it comes to providing support.

Further, most banks will not accept a trust with less than several hundred thousand dollars' worth of liquid assets. Most institutional trustees will accept trustee duties only if a trust includes their own specific trust language, making it unlikely that they would accept appointment as trustee of a trust you create yourself. When banks do agree to take a trust, they charge large management and administrative fees.

All trustees are entitled to reasonable compensation for their services—paid from trust assets. But family members or close friends who act as trustees often waive payments or accept far less than banks. If you cannot find an individual you think is suitable for handling your assets and do not have enough property to be managed by a financial institution, you may be better off not creating a trust. Also, it is common for banks to manage the assets of all trusts worth less than $1 million as part of one large fund, while charging fees as if they were individually managed. Any non-institutional trustee who invests trust money in a conservatively run mutual fund can normally do at least as well at a fraction of the cost.

All of that said, if you still prefer not to name a friend or family member, you do have another option: You could name a person who is a professional financial manager. This could make good sense if there is no one in your personal life who could do the job, and you know a professional financial manager that you trust. Just make sure you talk to that person ahead of time to make sure you have a mutal understanding about the scope of the job, the rates, and that person's willingness to do it.

If you feel very strongly about naming an institution as a property manager, work with a good estate planning lawyer to make sure that your estate and the institution are a good match.

Getting the Manager's Consent

Talk with the people you name as property managers to make sure that they're up for the job. Explain what their duties will be, get their consent to name them, and ask them to let you know if they change their mind or if their circumstances change in a way that would affect their ability to do the job. You don't want their nomination to be a surprise, especially at what is sure to be a difficult time.

Explaining Your Choices

If you want to explain the choices you make in your will, we suggest that you do so in a letter that you attach to the will rather than in the will itself. This avoids any chance that you will accidentally add confusing or conflicting language to your legal document. A letter to survivors is a good, informal way to share the thoughts and reasons behind your decisions. If you want to write one, at the end of the will interview we offer guidance and examples to help you along.