March 11, 2015

Birth dates in a Testamentary Document

A common provision in a parent's testamentary document, i.e. a trust or will, is the birth dates of their children. This causes many parents to ask, why should I list the birth dates of my children in a testamentary document? The answer is quite simple.

California law places restrictions on a child's inheritance. Principally, if a child inherits a large sum of money, e.g. $100,000, and there is no limitation on the distribution, a court-supervised guardianship will be needed. The guardianship is time-consuming and expensive to administer because of accounting and fiduciary requirements. The guardianship will generally end when the minor turns 18 years old. Probate Code § 1600. The result is that an 18-year old will be able to spend their inheritance on whatever they please when they reach the age of majority. I know I would have made plenty of frivolous purchases at age 18 (my senior year at Mountain View High School). During the guardianship period though, the guardian expends the estate rather than the child.  

In light of this, it is typically prudent to not allow a child to inherit a large estate outright. Parents often insist that their children not inherit their estate outright until they reach a certain age. Therefore, a will or trust will include an age requirement for outright distribution. The common age threshold I have seen in testamentary documents is age 25. Although California law allows the interest to be held in trust for the child's lifetime. 

The listing of the child's birth date can clearly assist with determining the child's age. While it may seem like a minor detail, knowing the child's age immediately after reading the will or trust, makes the job of the estate administrator easier. There are already numerous tasks that need to be completed in order to properly administer an estate. Ascertaining the age of a child beneficiary is an easy job that should not be made hard. For instance, the estate administrator should not have to ask a child for their birth certificate or driver's license to determine their age.

A corollary issue worth mentioning is the listing of the child's name. A daughter might assume the name of her husband upon marriage (my wife did so). Jane Doe might become Jane Jones after marrying a Mr. Jones. Many parents have asked if it is necessary to change their trust to reflect a child's name change. My belief is that a name change does not merit a trust amendment. It is very easy to connect a child to a parent if provided a birth name and birth date given the uniqueness of the circumstance. There is only 1 person on earth who could match a parent's description of their child.