When setting up a disbursement arrangement for a life insurance policy, many of us certainly attempt to provide for children and grandchildren. Leaving insurance money to a minor can be a logistical nightmare, however, and there is a great deal of red tape that must be maneuvered. So how exactly can you do this without creating a financial nightmare for everyone involved?
One solution is certainly to hire a lawyer to act on behalf of the child, but this is costly and you will have no means of defending yourself against excessive charges. The simplest answer is to name a family member as executor of the funds, ensuring that they are able to sign all legal documents relating to the funds on behalf of the minor child. It is customary to offer some sort of monetary gift to reimburse the person for the burden, but it is not imperative.
Many seniors worry about leaving so much money to a child at once, or about placing control of the money in the hands of another party, whether or not they are related. The best solution to this is to set up a trust beforehand, ensuring that the funds are paid at certain times, rather than in one lump sum. This can prevent reckless spending on behalf of anyone involved and can help ensure that your child or grandchild is taken care of on a long term basis.
Leaving your policy or other assets to a minor is possible, and can be a wonderful decision. You will simply need to exercise a bit of caution when doing so. Taking the steps needed to ensure that your loved ones are cared for is always a good idea, and creating a trust or naming a trustworthy executor can always help to ensure that your assets and their disbursal are handled properly.