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Naming your child your life insurance beneficiary is something many parents want to arrange. If you are divorced, protecting and providing for your child may be the reason you got the policy in the first place, as you want to make sure that your child, not your ex-spouse, gets control of the funds. However, no state allows a child to manage property before age 18. If a child receives money through life insurance funds or other estate proceeds, or inherits property, he or she cannot manage it until they reach legal age. Name a Custodian if your Child is your Life Insurance Beneficiary Life insurance is very important in estate planning, as it can provide money that the deceased previously provided for the children though employment. In recognition of this fact, many divorces settlements require that the non-custodial parent have a life insurance policy that will make up for lost child support. Since the child can't receive the money, the court will name a trustee or custodian to handle the fund until the child is the designated age of 18, 21, or whatever age is required by law or established in the will. This person will often be the custodial parent. To prevent this you can name a relative or close friend who would use the money for the child's support, but the best time to do this is during the divorce process. Other Ways to Leave your Estate to your Minor Children Another way to administer the money to your minor children is by establishing a trust. Life insurance profits and other monies go straight to the trust to be administered by a trustee according to your wishes. Though a trust allows you to protect your kids beyond the grave, it is complicated to set up and should be done by a financial planner or an estate attorney. A different approach is to make your estate the beneficiary, but be careful as this approach can defeat the purpose of having money to provide for your children. Probate court decides on the distribution of your assets after your debts are paid. The process can take a year or more, and since the insurance money becomes a part of a bigger pool of assets (your "estate"), some of the funds intended for your children might end up paying your Visa bill. Consult a Family Law Professional After a divorce, you should change the beneficiary on all insurance policies and bank accounts. The best way to safeguard money intended for your minor children is to name a custodian of the funds. For more information about naming a minor child as your life insurance beneficiary, consult a qualified and experienced law firm.
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