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Minors Should Not Be Beneficiaries of Life Insurance Policies

A big mistake some people make is to name their minor children the beneficiary of a life insurance policy or other account with a beneficiary designation. If you die and your children are not 18, the minor won’t have the authority to take control of the proceeds. The probate court will have to appoint someone as a guardian of the estate. (This is different from the guardian of the person who is the individual who physically cares for the child.) Setting up a guardianship of the estate will take time and money and probably require the services of an attorney. The Court will apppoint an adult to take over the management and control of the minor’s inheritance until the minor becomes an adult. The Court has no authority however to spread the inheritance out over a number of years so this may result in a child receiving substantial money at an earlier age than the parents may have wanted.

If you have minor children and want to make them beneficiaries of life insurance policies, you should have a revocable living trust set up and make the trust the beneficiary of the proceeds. With a trust, the insurance company can transfer the proceeds directly into a trust account to be distributed to your minor children according to the terms of your trust. In this way you can insure that your minor beneficiaries will not have to have a guardian of the estate appointed and you can spread the distributions out over whatever intervals you want.

Also review your life insurance designations every few years to be sure you have the primary and secondary beneficiaries up to date. Changed circumstances in your life such as marriage, divorce, deaths, etc. may require that you make a change in beneficiaries.

If we can help you set up a revocable living trust or review your beneficiary designations, please call us or e mail us at Law Office of Scott C. Soady, A Professional Corporation for a complimentary consultation.

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