worried that surviving parent (guardian) will spend all of the life insurance proceeds before the minor is old enough to claim the life insurance proceeds.
2007-08-30 06:41:39 · 32 answers · asked by ja 1 in Business & Finance ➔ Insurance
Possibly, if the surviving parent is the trustee. You could set up a trust for the child so the insurance payment would go there and out of the parents reach. See an attorney for this.
2007-08-30 06:44:42 · answer #1 · answered by Anonymous · 2⤊ 1⤋
You have a lot of guesses on this issue.
The short answer is "Yes". Legally or illegally. The ex is the guardian and as such could petition the courts to approve spending the funds for the child's HMEW (health, maintenance, education, welfare). Likely, the court would approve such a request, depending on it's specifics and the support the ex is providing directly. While it would be illegal for the ex to spend the funds without court approval ... it happens. Often times it is never caught because the child is too young to understand and the ex doesn't tell them.
Now the long answer. If this is any significant amount of money ... you will likely ruin your child. Why? At the ripe old age of 18 ... they will have unfetterred access to the money. Typically, they will forego education ... buy a sportscar ... use alcohol or drugs to numb the pain of adolescence ... and by their early 20's they will be out of money ... uneducated ... and have a substance abuse problem. All because you failed to protect them from it.
The solution is a trust. Typically, a testamentary trust (one created in your Will) that funds their education ... delays the significant distributions until they have matured ... and even then makes it over a 5 or 10 year period. The trustee would have full control of the funds ... but could not legally direct them to themselves. Your "ex" should NOT be the trustee.
I recommend that you use a trust to teach your child the money lessons that you wouldn't be there to teach them.
2007-08-30 07:50:26 · answer #2 · answered by CPA/PFS 2 · 1⤊ 0⤋
Whoever the guardian of the child is has pretty broad control over how that money is spent. That's why you should create a revocable trust to be the beneficiary of your life policy (it only becomes irrevocable at your death) with your kid as the beneficiary of the trust. The trustee (and you can have more than one) has very specific guidelines about what they can spend that money on and if it is unreasonable, they can be sued for violating the interests of the beneficiary of the trust.
Furthermore, this is not Y!Guesses, this is Y!Answers. If you do not know the answer, leave it alone.
2007-08-30 09:21:20 · answer #3 · answered by aaron p 5 · 1⤊ 1⤋
That can happen if that is the way the 'beneficiary' is awarded the proceeds ... but if you don't want that to happen, then have the 'proceeds' of the insurance put into an 'irrevocable trust' until the age (any age over 18, but most people use the age of 25 for 'maturity' reasons) you think your child will be able to 'handle the funds' without the 'guardian' taking and spending it all.
2007-08-30 06:46:39 · answer #4 · answered by Kris L 7 · 2⤊ 1⤋
Establish in your will that the money is to be put into trust until the child is 21. Talk to a lawyer on how to safeguard this account so that the ex cannot get legal control of the money. That way the child can receive the money when s/he is old enough to understand it. Establish some form of child support so your ex cannot sue the trust for support.
Remember the bills you owe in life your estate will owe in death. So make certain you have insurance to cover those expenses or your child will be left with nothing anyway.
2007-08-30 07:00:34 · answer #5 · answered by blueink 5 · 0⤊ 1⤋
You have to be sure that the beneficiary named is to receive the insurance only at a designated age, like 18 or 21, and to be placed in a trust fund until that time. No other party can claim the policy This information must be placed in the wording of the policy. Insurance people can help or recommend an attorney.
2007-08-30 06:49:40 · answer #6 · answered by My Final Answer 3 · 0⤊ 3⤋
if the parent or guardian has a record of reckless spending or is an alcoholic or addict, you must take action.
in the case of reckless spending you may sit the parent down in private and inform them of the law, and that you are watching.
the money should be put in a trust earning interest.
then doled out for college only.
then maby downpayment on a house.
then the get the cash when older perhaps 35.
of course the person who set up the policy should have this clear in their will and an attorney set up to take the funds and put it into the trust.
In reality,THE TRUST would be the beneficiary.
2007-08-30 06:49:08 · answer #7 · answered by Anonymous · 0⤊ 2⤋
From my understanding she can use some of the money on things that the child needs such as food/clothing/school and thing like that. Necessities that is all. She can not spend it on herself. Unless it is stated in the will that the money is to be held in an account until this child reaches age she will have access to this money for these situations. If the child goes into the hospital for some surgery or emergency she can use some of that money. Now, I could be wrong and I am not a lawyer, but you could get a free consult from a lawyer since these laws are different state to state. Good luck.
2007-08-30 06:48:14 · answer #8 · answered by shadowsthathunt 6 · 0⤊ 3⤋
Proceeds will be given in the minor childs name.From there the legal guardian needs to deposit funds to an account in the minors name. Better ask a bank offical on how to protect the minor.
2007-08-30 06:47:20 · answer #9 · answered by Anonymous · 0⤊ 2⤋
The minor has to be of age to receiver the proceeds, his mother or guardian cannot spend the money on them self.
2007-08-30 06:55:59 · answer #10 · answered by Anonymous · 0⤊ 2⤋