If I were to die, who gets access to my life insurance benefits, if the beneficiary is a minor?

Question

I want to make my son the primary benificiary to my life insurance policy, but what if I died when he was only 4 years old? If my sons father (my ex husband) got custody of my son and my son was the only benificiary would my ex husband have access to that money? I want part of that money to be used for my funeral and burial, if my son was only 4 how would he be able to use that money for my funeral, who would have legal rights to say what the money is used for?
I have talked with my insurance company and they said I cannot assign an executor of estate? I live in California and they said if there was no legal guardianship of my son when I die they money is held until my son is a certain age??? Then the money would not be allowed to be used for my funeral???
What is the best thing to do in order to make sure that I have a burial and that my son has money to survive without my ex-husband having access to it? If he got control of that money my son would never see it.

Answer 1

If you leave the procedes to a minor, exactly in their name, then their guardian, whoever it is, gets access to the funds. So yes, your ex would get access to the money. Worse, if HE then dies, and the child is adopted out, THOSE people get the money.

What you need to do is set up a trust - or leave the money "in trust" to your son, and name a bank or your mother or your cousin or your neighbor as "trustee" for the funds.

You cannot assign an executor via a beneficiary clause in a policy. The executor has to be named in a will.

Your son will not have a lack of legal guardianship for long, if you should kick off. His natural father would get him first, then any other relative that asked for him, or a foster parent, or adoptive parent.

Your funeral will cost, what, $6,000? How much is the policy for? If it's for $10,000, then you're not talking about enough money to matter. If it's for $100,000, leave it all to your son, and don't worry about the funeral - your estate can pay for that, by selling all your assets - your car, your furniture, your computer, etc.

You really need to sit down with a local lawyer to draw things up, but I was in your exact shoes, and left the money to my mother, knowing that she'd bury me, and wouldn't misspend the money.

Answer 2

I am licensed in Indiana so there may be variations in the law. When a minor is named a beneficiary and the owner dies while the beneficiary is under 18 the money is held in trust for the child.

I would suggest talking with an attorney and looking into a trust established for the benefit of your child. The beneficiary of your policy can be the trust. You determine the provision of the trust.

You would have to ask your attorney but you should be able to take care of you funeral expenses as a provision of the trust.

Again, an attorney could help you with this matter.

Hope this helps.

Answer 3

Most insurance applications ask for a primary and contigent beneficiary. The contigent beneficiary is set up in case the primary benficiary cannot for any reason ( primary is a minor, disabled) take control of the insurance. You need to assign a contigent beneficiary. That is the easiest no cost way to handle the situation. The other would be to consult a lawyer or financial consultant and have a trust set up naming the trust as the beneficiary of your insurance policy. You can then set the terms of the trust. Your best bet would be to consult the agent through whom you purchased the insurance. If you are not satisfied with his answer you as a consumer have the right to change the agent of record on your policy at anytime.

Answer 4

I must emphasis that I am writing from England, so I cannot be 100% certain that what I say will be appropriate under Californian law, but what you ask and what you have already been told (by and large) would be what would happen under English law, so here goes. I think you need to split the insurance policy in two, one, the larger part, for your son as beneficiary, the smaller (estimated at the cost of a funeral) without a beneficiary so it falls into your general estate and is available to pay your funeral expenses.

I think you also need to appoint a guardian of your son - clearly someone you can trust. That is only sensible anyway. If the insurance money can be paid to them, then that solves your problem (Here in England it would not be paid out to an infant, whether or not there was a guardian, until that infant was 18)

Answer 5

On the same form where you put the minor as the beneficiary you MUST assign an adult (and even a back up on some) as primary. For ex: I had my children as beneficiary, but I chose my sister as primary, she will be make the decisions on the kids wanting to use the money for certain things. Be careful of funny companies....

Answer 6

You could assign the policy to a revocable trust that would spell out what the proceeds are to be used for. You could say that anything above what is needed to pay for the burial will be placed in trust for the benefit of your son or other living children. The trustee wold be given discretion to pay the guardians an amount needed to support your son until he reaches the age of majority (18) or at some other age you choose.
The trustee should be someone other than the guardian so that there is someone guarding the money and not just spending without question.

Answer 7

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Answer 8

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This is probably the most important part. With texting, you can stop and think about what you want to say to your ex at each step of the way. Instead of reacting emotionally, you can take your time, figure out the right thing to say (I’ll give you most of it), and be strategic with your ex without saying something that you’ll regret.

Answer 9

Visit an attorney to set this up properly. Typically they will set up a will, and maybe a trust. You dictate the terms of the trust and how money is used. That way if you die, the policy proceeds go to the trust, and the money is spent as you intended.

Visit an attorney, it will be money well spent.

Answer 10

Make sure you get a will set up listing someone to be the guardian for your son. I would list whomever you decide as the guardian. Make sure it is someone that you trust and explain to them what you would like done with the money. The money should go to the guardian to help pay for your sons living expenses as he grows up.