How to Leave Assets to Minor Children in Colorado: What Parents Need to Know
Why is it Important to Consider Your Children When Creating Your Estate Plan?
In Colorado, a minor cannot legally manage inherited assets. That single fact shapes almost every decision parents make in estate planning. Here’s what that means for your family and what you can do about it.
What Happens When a Minor Inherits Assets Without an Estate Plan in Place?
Without a proper plan, a Colorado court may need to appoint someone to manage what you left to your minor until they turn 18 or 21. That appointed person, called a conservator in Colorado, is supervised by the court, which means ongoing legal fees and court hearings for your family. The good news is that various legal tools can be used to avoid court involvement and make sure your money is used to provide for your minor children by your terms.
Best Ways to Leave Assets to Children in Colorado Springs: Your Main Options
- Create a Revocable Living Trust
A revocable living trust allows you to name a trustee to manage assets for your child, set conditions for distributions -such as age, criteria, or life milestones like graduation or marriage – and skip probate and “living probate” (i.e., conservatorship or guardianship) entirely.This option gives you the most control over your child’s financial future. You stay in control while you’re alive, and your instructions stay firmly in place after you’re gone.
- Create a Testamentary Trust in your Will
A testamentary trust is created within a person’s last will and testament. Because it’s created inside a will, it doesn’t take effect until you die and it has to go through probate first. You also can’t fund it during your lifetime, which limits some planning flexibility. It’s a workable backup option, though it offers less flexibility and causes more court involvement than establishing a trust for your child within your own revocable trust. - Custodial Accounts Under the UTMA
Colorado follows the Uniform Transfers to Minors Act, which lets you transfer almost any type of asset to a custodian who manages it on your child’s behalf until they reach adulthood. Real estate, cash, investments, business interests, and personal property all qualify. A custodian is named during the account setup, and that person manages and distributes the assets for your child’s benefit without court supervision.
The practical upside is simplicity. A UTMA account is cheaper to set up than a trust, and it often works well for straightforward transfers where you’re not trying to attach conditions or stagger distributions.
The trade-off is control and the loss of several benefits that come standard with a trust. A UTMA account has no built-in incapacity planning, so if something happens to the custodian there’s no automatic succession structure. It doesn’t accommodate special needs planning, which matters if your child has or develops a disability that could affect benefit eligibility. There’s no mechanism for backup beneficiaries or successor trustees, and none of the flexible contingency options a trust can be drafted to include. Further, when your child turns 21 in Colorado, they take full ownership of everything in the account with no restrictions or guardrails in place, and there’s no way to change that within the UTMA structure itself.
If handing a 21-year-old a significant sum concerns you or if you’d like to plan for a variety of scenarios in a more effective way, a revocable living trust gives you the flexibility a custodial account simply can’t match.
What Happens Without a Plan: The Importance of Estate Planning for Minor Children
If you die without an estate plan that accounts for your minor children, a Colorado court decides who manages their inheritance and under what terms. A court will also appoint a minor guardian to raise your child, with no input from you on who that person is. Once they reach adulthood, your children may receive a large sum at 18 with no conditions attached. Your family may face court fees and legal disputes during an already hard time.
Equinox Estate Planning Will Help You Plan for the Expected and the Unexpected
If you are ready to create a will or trust or update your estate plan, working with a knowledgeable and skilled Colorado estate planning lawyer is one of the best strategies to help protect your minor children.
Contact Equinox Estate Planning today at (719) 301-0642 or click the link to the side to schedule your estate plan review and protect your family, assets, and legacy.