Jerry Taylor explains why life insurance payouts can't go directly to minor children. The court appoints a guardian and requires ongoing accounting and approval for investments. You can skip this hassle by naming a trust as your beneficiary instead.
If you've made your minor children the beneficiaries of your insurance policy, will they actually receive that money if something happens to you? The answer to that question is no. An insurance company will not pay out money directly to a minor child. Most likely someone will have to go to court and ask the judge to appoint a guardian or a custodian for your minor child. A judge that you probably don't know. Even if there is a surviving parent, they'll have to ask permission of the court to be custodian of those assets. And the court will probably ask for an ongoing accounting of what's being done with those assets. And the guardian may even have to get the court's permission on how to invest that money. This can all be avoided by creating a trust and naming the trust as the beneficiary of your insurance policy. Now click on my picture, click on my Linktree, and you'll see the link for my newsletter.
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