What are the things should I do to ensure that my children will receive some money from my insurance?

Question

I am an unmarried mother of 3 teenage children. I have a life insurance policy that I would like to make my father the beneficiary of so that he can distribute the money to my children at the appropriate ages. Is this all I need to do? Do I also have to name them as beneficiaries also?

Christine Socrates · Answer

The best way to make sure that your children receive the life insurance money is to establish a trust for them and have the proceeds payable to the trust.  Your father can be appointed trustee of the trust and will need to abide by the provisions you set forth for your children regarding the distribution of money to them.  I would be happy to assist you in this matter or you can retain any estate planning attorney as well.  Good luck!

Christine James · Answer

Do a trust, name the trust the beneficiary and your father the trustee with your children as beneficiaries.  Don't rely on your father to just do it because anything can happen.  For instance, what happens if he dies before he distributes the money?  Do a trust.

Patrick Currin · Answer

You could put your life insurance policy into a trust.

Jeffrey Strickland · Answer

You need to meet with counsel. If you left to your dad, and he did not plan his estate properly, the funds for your children could never make it to them. You need to execute the proper estate planning documents. At the least, you need a will with guardianship provision to ensure your children are raised by the people you desire. And a minor's trust is likely necessary.

Brian Haggerty · Answer

Make a will which creates a testamentary trust for your children, and have your father as the trustee, and name the trustee of the trust as beneficiary of the life insurance. If you just leave your father as beneficiary, what happens if he needs long-term care and all his assets are spent on it? Your kids life insurance money is gone, too. Same if he runs into tax or creditor problems, gets divorced  too many things can go wrong. Get with an estate planning lawyer and do this right.

Victor Waid · Answer

Advise you name your children as beneficiaries only,  and leave father off policy. When time comes to distribute proceeds , and the children are minors, then your father can apply to court to be appointed guardian ad litem for the children; the court will require proceeds be placed in blocked trust accounts for each child's share.

Jayne Sebby · Answer

If you want your children to inherit the money, name them as beneficiaries on the policy or name your estate as the beneficiary and then direct in your will that the money goes to your children.  If a large amount of money is involved, put the funds in a trust for each child and direct when and how the money should be distributed.  You can name your father as trustee.  There are tax consequences to either choice so check with a tax expert before making a decision.

Thomas Edward Gates · Answer

You should name the children as beneficiaries and not your dad. If they are minors at the time of your death, a trustee (Possible your dad) will manage the funds until they turn to the age of majority.

Randall Romei · Answer

As the beneficiary of the insurance policy the death benefit would be your father's asset.  Upon his death the policy would be part of his estate. Any action taken by your father to benefit the children with the funds would be a gift from your father to the children. It is possible to create evidence of your intent that would allow the children to prove the creation of a constructive trust that they could enforce against the fund created by the death benefit but an actual written trust is a more certain device to execute your intention, more clearly establishes your intention, protects the assets from your father's creditors, can outlive your father and is easier to enforce and control. If you made your children beneficiaries of the policy they would directly receive the death benefit upon your death. If they were minor's they would receive the funds into a custodial account and would have access to the funds when they reach age 18. If you make a trust the beneficiary and your father the first trustee of the trust then the terms of the trust would direct when and how the trustee, your father or a successor, would distribute the funds to the children.

Edwin K. Niles · Answer

That depends on how much you can trust Dad. You also face the probability that Dad will go first. You should discuss it with the insurance agent, but my suggestion is that you name Dad as trustee for the benefit of the children, to be distributed as each child reaches XX of age, with an alternate beneficiary under the same terms.

Julie Mains · Answer

Your father would have no legal obligation to distribute it if you do it as you are proposing.  You should really have a trust that is the beneficiary to insure that your minor children are taken care of according to your wishes.

James Weiner · Answer

You need to write a trust and have the money go to the trustee of the trust for the benefit of your children. If you simply have your father the beneficiary he has no legal duty to distribute the money to your children ever.

James Maguire · Answer

Set up a minor's trust, with your father as trustee. The funds can be used  for education, support, etc. of your kids until the kids are adults. The trust would be the beneficiary of the life insurance.

John Brennan · Answer

There are a number of ways to accomplish your wishes, including the one which you are proposing if your father is will, and survives, to do informally. Your problem is it will not be legally binding, the funds will be subject to his creditors. You should really spend a bit of time and money to do this right and get an estate plan in effect.

Dara J. Goldsmith · Answer

If you name him the beneficiary he can do as he pleases. You may want to consider a trust.  Speak with an estate planning attorney to address this and other estate issues. This information is only intended to give general information in response to an inquiry. It does not establish an attorney client relationship. This response is only based upon the limited facts presented and is merely intended to assist you in determining if you should contact an attorney to provide you with legal advice.

Steven Fluhr · Answer

If you are sincere about your wishes, you need to name your children as equal beneficiaries. If you name your father, your children have no right to the money and will only get what your father decides. If you trust your father implicitly, and most people do, then your current plan will work.

Neal Michael Rimer · Answer

If you name your father as the beneficiary, then he is the recipient of the gift. That money becomes part of his estate. If he gives money to your kids, then he is making a gift.  Depending on the amount, there may be gift and estate tax consequences. You can name your children as the beneficiaries in equal percentages if you want. You might be able to name a custodian for the benefit of the children. (you could make your dad the custodian) until age 18 or perhaps even to age 25. If you are speaking about a larger sum of money, it might make sense to create an irrevocable trust. The irrevocable trust might become the owner and the beneficiary of the life insurance policy and proceeds (the policy and proceeds are therefore not a part of your estate) or just the beneficiary of the proceeds for the benefit of your children.  You father could be named as the trustee. This gives the trustee much more flexibility on how to use the funds and control them until distributions to the children.

James Frederick · Answer

I would establish a trust and name the kids as beneficiaries of the trust. Anything different is less than ideal. Naming your father, for instance, is problematic for many reasons. If you name him alone, the money is his, upon your death. That could result in the money passing to his spouse, if any, to his creditors, to the State of Michigan, (if he ever needs long term care), etc. A trust is the best way, bar none, to take care of minors.

Mark T. Peters · Answer

That is the exact wrong thing to do.  Even if your father can be trusted, he may face gift tax problems if the amount is large enough.  My preferred method is to build a testamentary trust into your will with the proceeds of the life insurance going into your estate.  Bills are paid and the remainder goes into trust for your children.  Pick somebody to be trustee who will not be their guardian if they are minors.  Then at the appropriate times and in the appropriate amounts, they can receive their shares.  Talk with a good estate planning attorney about how to handle this.

Find a Lawyer

Ask a Lawyer

Read Legal Articles

Ask a Lawyer

Read Legal Articles

What are the things should I do to ensure that my children will receive some money from my insurance?

19 ANSWERS

Find Local Estate Planning Lawyers

Helpful Resources

Ask a Lawyer