Mark Kohler says large life-insurance payouts to young adults vanish within a year. He's seen kids blow through millions. The fix: put the death benefit in a trust that covers essentials only and rewards grades, graduation, and graduate school.
Life insurance is usually a big dollar amount. You know, you get life insurance for half a million, million, $2 million. But because it's such a big dollar amount, what I worry about is who's getting that money. And I've got other stories and examples of kids receiving big chunks of life insurance, and within a year, the money's gone. It's very dramatic sometimes to see this happen. And it really doesn't help the kids as they're trying to go through adulting and life and college. I'll tell you, if my parents had passed away when I was anywhere between, gosh, 16 and 25, and I had a couple million dollars or a million dollars dropped in my lap, I probably wouldn't be here today. And my parents would've never meant that to happen. But if they were to have that life insurance go into a trust that says, hey, Mark doesn't get this money yet unless it's for medical reasons or for tuition and housing to go to college. And in fact, if he gets straight A's or maybe even B's or graduates, we'll give him a bonus. You know, he can have an extra 50 grand or 100 grand upon graduation. And if he wants to go to graduate school, we'll double down even more. That money can be used as a tool, a carrot, to help kids make better decisions as they're adulting rather than just dropping money in their lap.
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