You can name your minor children as a beneficiaries, but if you die, the life insurance company will not be able to pay the children unless they are 18 or 21 years old, depending on your state’s laws.
Generally, a guardian is appointed and the money will be withheld until the children are of legal age. A trust can also be established to help manage the proceeds for your children.
You can name a trust as the beneficiary for your children.
In the past, trusts were for those who were wealthy but now trusts are set up for average households to avoid probate delays and estate taxes. Trusts need to be set up according to your specific state laws, so it is important to contact a lawyer concerning any state regulations.
You will name a trustee that will be responsible for the assets until your children can receive them. Trusts can be simple or complex depending on the number of children, payment terms for the trustee and how to avoid any unnecessary fees.
A pot trust is one for all.
For example, a couple has everything set up to leave to each other. But if they die, their two children inherit everything and the father’s younger brother will be the trustee, managing all assets for the children.
According to USA.gov:
-The grantor has the right to specify exactly how the money in the trust is invested. The grantor and the trustee might have very different ideas about investment strategies, so make sure this gets clearly defined.
-The grantor has the right to specify exactly how the assets should be divvied up down to details like including an annual cost of living adjustment for the beneficiary or paying for travel expenses for others to visit the beneficiary in the case of illness.
-If the grantor wants to ensure that upon death any assets that remain outside of the trust are transferred to it, he or she should consider having a “pour-over” will to accomplish this.
-They also advise against trust scams and frauds if you decide to set up a trust for your family.
-Avoid high-pressure sales tactics and high-speed sales pitches.
-Avoid salespeople who give the impression that AARP is backing or selling the product – AARP does not endorse living trust products.
-Do your homework and get information about local probate laws from the Clerk or Register of Wills.