New York parents may have a desire to leave money or other assets to their children either while still alive or after their deaths. However, there may be a right way to do so. For instance, it may not be a good idea to name a minor child as the beneficiary to an asset. Instead, it may be better for a parent to create a trust that will inherit financial assets when he or she dies.
This may work out best because a minor child cannot legally own financial assets on his or her own. If a child does come into possession of such an asset, a hearing is held to determine which adult will manage the money until the child turns 18. However, the beneficiary may not be mature enough to handle a large sum of money at that age.
Creating a trust may provide some boundaries to increase the odds that the money is used in a responsible manner. A parent may also want to hold off on giving a child a highly appreciated asset until he or she passes on. This is because the child gets a step-up in basis at that point. Ideally, only assets that have minimally appreciated should be given to children while a parent is still alive to minimize future capital gains taxes.
Proper estate planning may reduce the likelihood of family disputes or other issues when a parent passes away. Creating a trust may allow parents to exercise control over how assets are used while still giving a child assets that he or she may need to live a comfortable life. An attorney can often be of assistance in this regard.