Minor Children and Your Life Insurance Policies.

One thing that you should do periodically is to check the beneficiaries listed for your life insurance policies.

First, you want to make sure that your current beneficiaries reflect your wishes.

Second, if you have minor children, you will want to consider the impact of naming them as beneficiaries.

Many parents have life insurance policies in place in case something happens to them before their kids turn of age. Think twice, though, before naming your minor children directly as beneficiaries for your life insurance policies.

If you die before your children turn age 18 and they are listed as beneficiaries, the surviving parent or other loved one will need to be appointed guardian (of the estate) for the children to receive the death benefit from the life insurance policies.

I've seen this in my practice where a young Mom lost her husband (in the line of duty) and had to petition the court for guardianship to receive the life insurance proceeds to manage them for her kids.

One way to avoid this is to name your Living Trust as the beneficiary for your life insurance policies. Your Living Trust names successor trustees to manage the trust assets if something happens to you. If you name the Living Trust as the beneficiary of the life insurance policy, the company will pay the death benefit directly to your trust for the private management by your named successor trustee in accordance with your trust terms.

It goes without saying that not having a beneficiary listed on financial products can potentially create problems for your loved ones later on.

Please seek the advice of an attorney if you have questions or need assistance with estate planning for your family.

Comments

[Planning Guide 101]

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