How to safeguard your minor children's inheritance in your estate plan

LEAVING an inheritance to minor children requires careful planning, especially when it comes to selecting appropriate vehicles, structuring beneficiary nominations, and complying with legislation.

- ALEX ODENDAAL

In the absence of property planning, your children’s inheritance could end up in the hands of unintended parties or be sub-optimally managed.

In this article, we explore how to safeguard an inheritance for your minor children by considering the type of asset, the role of legal guardians, and the benefits of testamentary trusts.

Bequeathing fixed property to a minor child

Our law allows a minor child to inherit fixed property and transfer it with the help of a legal guardian. While this provides a degree of legal protection, it’s important to be aware of the practical risks. Firstly, it’s important to ensure that your estate is sufficiently liquid, failing which the executor may be forced to realise the property to settle your estate's liabilities, despite your intentions for the child to inherit it.

Further, while your minor child will inherit the property, it is their guardian who has authority over the asset, although these powers are restricted — for instance, the guardian may not realise the assets without approval from the Master of the High Court.

To mitigate these risks, consider bequeathing the property to a testamentary trust that comes into formation upon your death. The effect of this is that the trust will take ownership of the property, and your nominated trustees will manage it on behalf of your child until they are old enough to do so independently.

The proceeds of life insurance