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In South Carolina, a minor that inherits a property must rely on a designated adult to manage their inheritance until they reach the age to control it themselves. This process is carried out one of two ways:
When a minor is named the beneficiary of Trust, a Trustee Will need to manage the assets according to the wishes outlined in the Will or Trust. First, they Will need to obtain a tax identification number for the Trust and open an account to hold the funds for the duration of the distribution period. In compliance with the conditions outlined in the Trust, a Trustee Will be held accountable for distributing the money to the minor until the mandated age. A Trustee is also expected to keep detailed records of tax returns, investments, and spending from the account to ensure compliance.
Once the child reaches the specified age (no younger than eighteen years old), control over the remaining inheritance Will be transferred over to the child and the account Will close.
When a Will leaves a monetary gift for a minor without a Trust, it is best if it is left under a named custodian which Will oversee the money under the Uniform Gifts to Minors Act (UGMA) until the child is old enough. This method can provide the owner of the Will with more reassurances that, after their passing, the money Will be well-cared for as they are able to name a person of their choosing to manage the inheritance.
When writing out a Will, bear in mind that the selected custodian Will have the right to collect, hold, manage, invest, and reinvest a minor’s property. They are expected to act in the best interest of the child, utilizing the funds for the minor’s needs. That said, they do not need court approval for their choices.
At the end of the custodianship, all money Will irrevocably become the property of the child to use, spend, and manage as they wish.
Inheritances left without a Trust or named Custodian; end up in Probate Court. When the courts will get involved, they will appoint a Property Guardian until the minor turns eighteen years old. As opposed to the responsibilities of a custodian or trustee who may have a trust or will dictate the age the child gains full access to their inheritance, a Property Guardian’s role is terminated as soon as the child turns eighteen. Another difference is the legal requirement on a Property Guardian to officially file and submit records to the court of all transactions, spending, investments, and distribution.