If you have young children and you die tomorrow, who controls their money?
Most parents have thought about who would raise their kids. Far fewer have thought about who would hold the checkbook. Missouri law has an answer for you if you don’t pick one, and you may not like it.
The default
A child can’t cash a life insurance check or sell the family farm. Somebody has to manage the money until the child grows up. If you didn’t name that person, a probate judge appoints a conservator.
Section 475.045 of Missouri law sets the pecking order, and the child’s surviving parent comes first. If you’re divorced, that’s your ex. Unless a court finds your former spouse unfit, your ex is in line to manage everything your child inherits from you.
The court supervises that conservatorship until the child turns 18. Then whatever’s left goes to the child, all at once, no strings attached.
The fix
You name a trustee. That’s the person who manages the money for your child under rules you write.
There are two common ways to do it. A testamentary trust sits inside your will and starts when the will goes through probate. A revocable living trust is set up while you’re alive and lets your chosen trustee take over without a probate case. Either one lets you decide what the money can pay for and at what ages your child gets it: some at 25, more at 30, the rest at 35, or whatever fits your family.
Missouri also has the Transfers to Minors Law, which lets you name a custodian on an account or insurance policy. It’s simple and cheap. But under Section 404.051 the custodian generally hands everything over at 21, and you can’t change that age. For a small account, fine. For a large insurance payout, I’d want a trust.
Picking the person
The guardian raises your kids. The trustee manages the money. Those don’t have to be the same person, and often they shouldn’t be.
The sister who’d be a wonderful parent may be the one in the family who never balances a checkbook. Splitting the jobs also builds in a check. The guardian asks for money for braces, and the trustee writes the check and keeps the receipt.
Look for someone who pays bills on time, keeps records and can tell a 19-year-old no when he wants a new truck. Think about age, too. If your youngest is 2, the trust could run 20 years.
Name backups
People decline, move away or die. Under Section 456.7-704, if your trustee can’t serve, the next person named in the trust steps in. If you didn’t name anyone, the beneficiaries can pick, and when the beneficiaries are small children, that usually means a judge. Name at least two backups, and ask each one before you write them in.
Follow the money
This is the step people skip. Life insurance, retirement accounts and payable-on-death bank accounts pass by beneficiary form, not by your will. If your policy says "my children," the insurance company won’t pay a 7-year-old. It’ll want a conservator.
Change the beneficiary to your trust. Then the money goes where your plan says it should, to the person you chose.
Picking that person is a family decision more than a legal one. Make it while you’re the one who gets to decide.
Patrick Nolan is an attorney with Nolan Law Firm in Kirksville. This column is general information about Missouri law, not legal advice.
The guardian raises your kids. The trustee manages the money. Those don’t have to be the same person, and often they shouldn’t be.
https://nemolegal.com/how-to-name-a-trustee-for-a-minor-in-missouri/