Should there be an adult for the primary beneficiary? I want to leave 401k for my two boys only ages 7 and 3?

Answer 1

Establish a trust in your will and assign the trust as the beneficiary of your 401(k).

This means that nobody else will own the asset. The trust will hold the money until your kids get older (you get to dictate the restrictions and assign who will manage this money on behalf of your kids).

My trust in my will states that my kids can use the money for college (along with medical bills and such), but the money will be dispersed to them in increments (about 20% every 2 or 3 years)begining at age 21 and ending at age 30 (no sense in dumping all that money on an 18 year old kid).

You've got to list somebody to manage that money in the trust (that's what the trustee does). Chose somebody that is dependable and trustworthy.

Answer 2

I would for sure not just leave it with an adult with an "understanding" that it is for the kids, for one thing it will have tax consequences, life insurance is tax free for the beneficiary, but if you give it to an adult that later gives it to the kids there will be taxes

second, no matter what you say or think,even if its your mom, a large sum of money can change things, it will end up being used at least partly for themselves,

you can put it in a trust ,you can make it so they control it at 21 or so, dont just happily assume that someone will just give away the money after you gave it to them and you are ten years gone or something

even if you trust this person, its your kids,take no chances at all

Answer 3

Set up a trust for their benefit. Then name the trust the beneficiary of your 401k. The executor of the trust can be your mother/father/sister/brother but I would consider making it a prominant local attorney. Call me paranoid but I prefer someone not connected to do what's right by the kids....and the balance isn't likely going to be high enough to make him think of running off to tahiti.

One critical piece of information: If you're currently married then your spouse has to sign off on this. This is true even if you're separated. ERISA law which governs 401ks state that the spouse is always the beneficiary unless they relinquish the rights to it in writing. There is a form that your current company can give you to allow this to happen.

Answer 4

You could appoint an executor ( an adult - friend, lawyer etc) who will oversee the funds until your boys reach adulthood - many people set up a trust fund, limiting the childrens access to the bulk of the funds until the children are 21 or 25 etc. In my humble opinion, you should make sure that the funds are well-protected by stipulating how they should be held/invested or dispersed (ie what the money is to be used for while the children are still young) until the children are at the age that you wish them to have total control over the remaining funds. And many people wait until the children are 25 or over to allow them full access, the reason being that for a young adult to suddenly gain control over a large sum of money often leads to problems for a young adult ( fast cars, illegal substances, fast/dangerous or wasteful living etc)
Good luck and I hope you live to a ripe old age and can make these decisions yourself!
Jx

Answer 5

Well, if you are trying to keep it away from the boys father, you need to make someone like your parents the beneficiary. In my case, my daughter's mother and I are split up. I want my money to go to my daughter in case of my death. However, since she's a minor, there's a chance that my ex will get the money. So, I just made my mother the beneficiary and we have an understanding that it's for my daughter.

edit - senji seems to be talking to me. Let me just explain that it's better my mother has this money than my deceitful ex.

Answer 6

You can put them on as beneficiaries, but you must remember that they will have no access to it until each of them turn 18. So I would say that it is fine to do, so as long as all other needs are met & in charge of by an adult, like life insurance.

Answer 7

You can leave it to them. Nothing states that it has to be an adult.

Answer 8

NO