Legal Blog

The Weekly Scenario: Problems with Naming a Minor as a Beneficiary

Question: Should I name a minor child as a beneficiary or contingent beneficiary of a life insurance policy?

Answer: The answer as always is that it depends on the objective of the life insurance.

But as a general rule, if minor children are designated as the beneficiaries, a guardian of the property (or conservator perhaps if there was no Will designating the guardian) would control the proceeds until the child turns 18. Therefore, a guardianship or conservatorship will need to be employed through the court system to collect the death benefit proceeds.  After the minor child turns 18, he or she will be entitled to receive those insurance proceeds in full with no restrictions.

Keep in mind thought, that the court could appoint a guardian or conservator who a parent might not have wanted to have control over the assets (e.g., a biological parent for whom he or she is separated or divorced or grandparents who are former in-laws).

As always, if you have any questions or would like to learn more, please let me know.

If you have any questions or would like more information please contact Steve Shane at: | 301.575.0313.

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Steve Shane Head Shot for webSteve Shane provides strategic counseling to clients in need of estate administration, charitable giving and business continuity planning while minimizing estate, gift, and generation-skipping transfer tax exposure. He offers legal guidance to clients on asset protection and the proper disposition of assets in accordance with the client’s objectives, while employing tax planning techniques such as the use of irrevocable trusts, life insurance planning, lifetime gifts and charitable trust. He is also experienced with drafting documents for business planning, the incorporation and application for exemption for Private Foundations and the administration of decedents’ estates.

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