Inheritance For Minors

  
I have a client whose 2 sons (ages 2 and 4) are set to inherit around $4M each in two years.  The parents only concern is what is best for the kids long term.  They just met with and estate planning attorney who is encouraging them to put the money into a custodial account where a judge will oversee all transactions. The attorney says this is the only way the kids will not have full access to the money at the age of majority (a major concern to my clients). I agree that turning over this kind of money to a 21 year old is a scary proposition, but involving lawyers and the court to oversee these accounts for the next 2 decades sounds expensive and cumbersome. I am wondering if there are any other options they could explore?

Could the parents oversee the account until the kids are at least into their teen years and then get the courts involved to limit the kids access? Are their any trust configurations that would limit the kids access after the age of majority?

On the investment side, I am thinking they should open a 529 plan for each and use the 5 year contribution election to fund their 529 plans. (To allow for that portion of the money to grow tax-free when used for college.) What other strategies are there that could help the money grow tax efficiently and/or keep the money from being spent recklessly?

Thank you very much in advance!
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18 days ago

​Since there appears to be no restrictions on the inheritance I cannot see how the attorney plans to control past the age of majority.  529 contributions make some sense although I would be tempted to suggest limiting it to enough for one private college education bill split into two accounts.  Nothing wrong with setting up regular parent custodian accounts for some of the funds, perhaps half the balance after 529 contributions.  Perhaps the rest could be invested in some type of deferred annuity for each that could be activated if the parents thought it necessary before 21.  Also, they could each buy $10,000 of I-bonds each year.