Just recently, I was asked if it is possible to name children, who are minors, as beneficiaries when they buy life insurance. So many people do and never give the matter a thought.
Sounds like it is the right thing to do. Right?
But actually, if you die while your kids are minors, they may not receive the proceeds from your life insurance policy immediately due to state laws and regulations regarding guardianship and who will control the money if guardianship was not established. Additionally, if you have a special needs child or adult you care for, inherited funds from you or anyone else may put their government support in jeopardy. This may disrupt care and support programs they depend on for their daily and future care.
So be very careful about naming your kids as beneficiaries; it could be years until they receive the money you intended for them—potentially delaying their education, disrupting their housing and quality of life and so much more.
There are solutions, and easy ones too, to make sure your intentions are executed properly, like the Uniform Transfers to Minor Act (UTMA), Uniform Gift to Minors Act (UGMA) or establishing a Trust.
Contact the Skoda Minotti’s Financial Services group if you would like more information on these topics or contact Deborah M. Marino at 440-449-6800.
Also, while on the topic of beneficiaries, if your will names a beneficiary and the policy indicates a different one, this ambiguity may cause a delay in the distribution of proceeds—with no assurance how the money will be distributed. So, make sure you are on the same page with both your insurance agent and your attorney.