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How Are Minor Beneficiaries Handled in Probate?

When an estate includes minor beneficiaries, the probate process becomes more complex. Special considerations and legal safeguards are required to ensure that the inheritance is managed responsibly and that the minor’s best interests are protected until they reach adulthood.

Court Case:

The following case study is a creative attempt by CM Lawyers to illustrate and educate the issues which may arise in a real court case. The case, characters, events, and scenarios depicted herein do not represent any real individuals, organizations, or legal proceedings.

• What Happened: In 2022, the unexpected death of Emily Johnson, a single mother, left her two young children as the primary beneficiaries of her estate. With no other close family members, the children were suddenly thrust into a legal and financial situation far beyond their years. The key question became: how would the probate process protect the minors’ inheritance?

• Participant Behavior: Emily had named her sister, Sarah, as the guardian of her children in her will. However, appointing a guardian was only one part of the process—the probate court also had to ensure that the children’s inheritance would be managed responsibly until they reached adulthood. While Sarah was ready to take on this role, she soon realised that overseeing a minor’s inheritance involved complex legal responsibilities.

• The Legal Process: Under New South Wales law, minor beneficiaries cannot directly inherit assets through probate. Instead, their share of the estate is usually held in trust until they turn 18. The court may appoint a trustee—often the nominated guardian or a legal professional—to manage the assets on their behalf.

  In Emily’s case, the court required Sarah to apply for appointment as trustee of her nieces’ inheritance. She had to demonstrate her ability to manage the assets in their best interests. The court also reviewed Emily’s will to confirm that the children’s needs would be met throughout their upbringing.

• Financial Consequences: Emily’s estate consisted of a life insurance policy, the family home, and various investments, collectively valued at $1.2 million. Because the assets were placed in trust, Sarah had to manage them under court supervision. Any expenses related to the children’s care, education, or welfare required court approval, ensuring the funds were used solely for their benefit.

  Managing a trust for minors is a long-term commitment involving careful financial planning and ongoing reporting. While trustees may be entitled to reasonable compensation, they are held to a high fiduciary standard and must act in the best interests of the beneficiaries at all times.

• Conclusion: The court granted Sarah the role of trustee, with the requirement that she submit annual reports detailing the trust’s management. The court’s ruling reinforced the importance of protecting a minor’s inheritance and ensuring it is used in accordance with both the deceased’s wishes and the children’s long-term welfare.

  Specific guidelines were also provided on how trust funds could be accessed for major expenses such as education and healthcare, while preserving the bulk of the inheritance until the children reached adulthood.

• Lessons Learned: This case illustrates the importance of comprehensive estate planning when minor beneficiaries are involved. Naming a guardian is only the first step—it is equally critical to plan for how the inheritance will be managed. Establishing a trust can provide long-term security for children, but it requires thoughtful preparation and ongoing administration. Executors, guardians, and trustees should seek legal advice to navigate the complexities of probate involving minors.