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Opinion

May 16, 2012

Protecting minor’s inheritance in race horse company

Ask An Attorney

My mother-in-law called me a few weeks ago to discuss her estate. My 14-year-old son (her grandson) is named in her will, and is set to receive a one-third interest in her horse-racing business after she dies.

 I know you have to be an adult to bet on horse racing in Texas, but is it legal for a minor to own a race horse company? If not, can I get a guardianship set up so that the company doesn’t go to some other relative? — Craig, Greenville, Texas

It is not illegal in Texas for a minor to own an interest in a race horse or a company involved in racing — or any other type of company involved in legal pari-mutuel gambling.

For the record, gambling on horses in Texas requires not only that the better be an adult, but they be at least 21 years old. However, owning a company involved in raising horses is not illegal because the money the companies earn is not tied to a direct payment from betting.

In order to legally race a horse for gambling purposes in Texas, every single person with more than a 5 percent ownership stake must be individually licensed by the Texas Racing Commission. That means if your son receives his ownership stake through his grandmother’s will, the Racing Commission may require him to be personally licensed before any horse the company owns is allowed to race. If he is under 18 at the time, you or another parent or guardian will be required to sign his application.

You do not need to worry about seeking a guardianship at this point. If your son inherits a business interest before he is 18, there are ways to protect his interests without a guardianship — especially considering special powers you may exercise as his parent and legal guardian. Whether and when you can exercise those powers depends on many unknown factors — including the state where the racing company was organized and the type of organization it is (i.e., corporation, partnership or other).

The best plan is to ensure that your mother-in-law and her attorney have accounted for the possibility of a minor owning the one-third stake. That may be a delicate conversation, but she should understand you are attempting to protect the inheritance she worked hard to leave to her grandson.

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