On occasion, our loved ones pass away too soon and we find ourselves in the care of a minor with a custodial account left to them by their caretaker. Typically these custodial accounts include life insurance policies, pensions, and other inheritance. Until they come of age, custodians are able to access the account in order to use that money for their care. However, how exactly can they use that money?
One common question that custodians ask is if they can use the money from that custodial account to cover funeral expenses. The unfortunate answer is no. The best rule of thumb for what you can and can’t do with a custodial account is does it benefit the minor? Paying for a funeral, even for the parent of a minor, doesn’t benefit them. Paying for their school tuition, on the other hand, does benefit them. So if you are considering what you can and can’t do with the funds in the account of a minor in your care, typically you need to ask yourself if it truly does benefit them. If you are discovered using the funds frivolously, there can be serious consequences for it.
No matter whether you were left with the care of a minor and their money or just want to consider planning the estate for your family after you are gone, contact us today. Ford + Bergner LLP is dedicated to making sure that your wills and trusts are carried out in the best regard to the wishes of the deceased.