You name a trustee for a minor in Missouri by writing that person's name into a trust: either a testamentary trust inside your Last Will and Testament or a revocable living trust. Then you point the money at the trust, including your life insurance and retirement accounts. Name at least one backup.
Skip that step and Missouri picks for you. Under Section 475.045, a child's surviving parent is first in line to be appointed conservator of the child's money, and the probate court watches over it until the child turns 18.
What happens if you don't name a trustee
Missouri law treats anyone under 18 as a minor for guardianship and conservatorship purposes (Section 475.010). A minor can't sign for a life insurance check, manage a brokerage account or sell an 80-acre farm. Somebody has to hold the money.
If you didn't pick that somebody, the court does. Section 475.045 sets the order: the child's parent comes first, then, for a child over 14 with no qualified parent, a person the child nominates. If both parents are dead, a person named in the last surviving parent's will gets the job. If none of those works, the judge appoints "the most suitable person who is willing to serve."
Read the first line of that list again if you're divorced. If you die, your ex-spouse is the child's surviving parent. Unless a court finds your ex unfit, your ex is first in line to manage whatever your child inherits from you.
Then there's the clock. A conservatorship ends when the child turns 18, and whatever's left goes to the child outright. We covered that problem in detail in If You Leave a Child's Inheritance Without a Trust in Missouri.
Where you name the trustee
You have three tools. They don't do the same job.
A testamentary trust in your will
A testamentary trust is written into your will and comes to life when the will goes through probate. Your will names the trustee, the backup trustees and the rules: what the money can pay for and at what ages your child gets it.
It's the lower-cost way in. The tradeoff is that the assets pass through probate court first, and the will becomes a public record when it's filed.
A revocable living trust
A revocable living trust is set up while you're alive. You serve as your own trustee and name a successor trustee to take over when you die or can't manage your affairs. The successor steps in without a probate case.
For a family with young children, a house and a life insurance policy, this is usually the cleaner setup.
A custodian under the Missouri Transfers to Minors Law
Missouri's version of the uniform transfers-to-minors act is the Missouri Transfers to Minors Law (Section 404.005). It lets you name a custodian instead of a trustee. Under Section 404.027, you can designate a custodian in your will, a trust, a deed, a life insurance policy, a retirement plan or a payable-on-death or transfer-on-death direction. You can name substitute custodians in order, and you can change the designation any time before the property becomes payable.
The wording is specific. Section 404.047 says the designation reads, in substance, "as custodian for (name of minor) under the Missouri Transfers to Minors Law."
The catch is the age. For this law, a child is a minor until 21 (Section 404.007), and under Section 404.051 the custodian generally hands everything over at 21. You can't push that to 25 or 30, and you can't add your own spending rules. A custodianship works for a modest account. It's a poor fit for a $500,000 life insurance payout.
One more trap. If nobody named a custodian and the money comes from a third party, such as an insurance company, Section 404.031 requires court approval for a custodian who isn't a bank or trust company when the property is worth more than $10,000. Naming the person yourself avoids that trip to court.
How to pick the right trustee
The trustee manages money. The guardian raises your child. Those are different jobs, and they don't have to go to the same person.
Parents often name the same sibling for both roles because it feels tidy. Sometimes that's right. But the sister who would be a wonderful parent to your kids may be the person in the family who can't keep a checkbook balanced. Splitting the roles also builds in a check: the guardian asks for money for braces, and the trustee writes the check and keeps the receipt.
What to look for in a trustee:
- Money sense. They need to pay bills on time, keep records and ask for help when they're out of their depth.
- Backbone. At 19, your child will ask for a new truck. The trustee has to be able to say no and mean it.
- Age and health. Your parents may be the people you trust most. If your youngest is 2, the trust may run 20 years or more. Pick someone likely to be around for that.
- No conflict. Be careful naming someone who inherits whatever is left if your child dies young. It isn't automatically wrong, but you should see the conflict before you sign.
Co-trustees and professional trustees
You can name two people to serve together, such as a brother who's good with numbers and a close friend who knows your kids. Co-trustees have to work together, so pick two people who get along.
A bank or trust company is another option, especially for a larger trust or a family that doesn't have the right person. Professionals charge a fee, usually a percentage of the assets. Missouri lets you set the trustee's pay in the trust; if you don't, the trustee is entitled to compensation that's "reasonable under the circumstances" under Section 456.7-708. Family members often serve for expenses only, and you can say so.
Always name backups
People decline. People die. People move to Arizona and stop answering the phone.
Missouri's Uniform Trust Code covers what happens when a trustee spot opens up. Under Section 456.7-704, the vacancy is filled first by the successor named in the trust. If there isn't one, a majority of the qualified beneficiaries can appoint someone. If that fails, the court appoints the trustee.
When the beneficiaries are young children, that middle option is shaky, and you end up in front of a judge. Name a first and a second backup. Also give someone, such as the guardian or a trusted adult, the power to appoint a new trustee if everyone on your list is gone.
Nobody is forced to serve. Under Section 456.7-701, a person you name can decline, and someone who doesn't accept within a reasonable time after learning of the job is treated as having declined. A trustee who later wants out can resign on 30 days' notice to the qualified beneficiaries and any co-trustees, or with court approval (Section 456.7-705). So ask your choice before you name them.
What the trustee will have to do
Tell the person what they're signing up for. Under Section 456.8-813, a trustee has to keep the qualified beneficiaries reasonably informed and, within 120 days of accepting the job, notify them of the acceptance and give a name, address and phone number. With minor beneficiaries, that notice usually runs through a parent or guardian.
A Missouri trustee doesn't have to post a bond unless the trust requires one or a court finds one is needed to protect the beneficiaries (Section 456.7-702). Most family trusts waive it to save the premium. That's one more reason to pick someone honest, since nobody is checking in every year the way a probate court does with a conservator.
Our step-by-step guide for successor trustees covers the job from the trustee's side, and if your first choice no longer fits, here's how to change a successor trustee.
Connect the money to the trust
Naming a trustee does nothing if the money never reaches the trust. Life insurance, 401(k)s, IRAs and bank accounts with a payable-on-death line pass by beneficiary form, not by your will.
If your term life policy names "my children" as beneficiaries, the insurance company won't pay a 7-year-old. It'll want a conservator or a custodian. Change the beneficiary to your trust, or to the trustee of the testamentary trust under your will, and the money goes to the person you picked. Our post on life insurance beneficiaries in Missouri covers the forms.
The short checklist
- Decide between a testamentary trust and a revocable living trust.
- Pick a trustee, plus a first and a second backup.
- Ask each of them, and tell them where the documents are.
- Decide the distribution ages and what the money can pay for.
- Decide whether the trustee is paid and whether a bond is required.
- Update every beneficiary form to name the trust.
- Name a guardian for your children in your will, separate from the trustee if that's the better fit.
- Look at the plan again after a divorce, a death in the family or a new baby.
Talk it through
Picking the person who will control your child's money is a family decision more than a legal one. If you're a parent in Kirksville, Adair County or anywhere in northeast Missouri and you want to set this up, call Nolan Law Firm and we'll work through the names with you.
Frequently asked questions
How do I name a trustee for my child in Missouri?
Write the trustee's name into a trust, either a testamentary trust inside your Last Will and Testament or a revocable living trust. Name at least one backup, then change your life insurance and retirement beneficiary forms to the trust so the money reaches the person you picked.
Who manages a child's inheritance in Missouri if no trustee is named?
The probate court appoints a conservator. Under Section 475.045, the child's surviving parent is first in line, which can mean an ex-spouse. The conservatorship ends at 18 and the child receives what's left outright.
Can the guardian and the trustee be different people?
Yes. The guardian raises your child and the trustee manages the money. Many families split the roles so the person best at parenting and the person best with money each do the job they're suited for.
At what age does a custodian under the Missouri Transfers to Minors Law hand over the money?
Generally at 21. Section 404.007 defines a minor as under 21 for this law, and Section 404.051 requires the custodian to deliver the property when the child reaches that age. A trust lets you choose later ages.
What happens if my named trustee can't or won't serve?
Under Section 456.7-704, the successor named in the trust steps in first. If none is named, a majority of the qualified beneficiaries can appoint one, and if that fails, the court appoints a trustee. Naming two backups keeps the decision with you.
Does a Missouri trustee have to post a bond?
Only if the trust requires it or a court finds a bond is needed to protect the beneficiaries, under Section 456.7-702. Most family trusts waive the bond.
This article is general information about Missouri law, not legal advice, and it does not create an attorney-client relationship. Talk to a Missouri attorney about your situation.