I wish to name my minor children as my contingent beneficiaries. What type of wording should I use to designate an adult to be in charge of the funds until they are old enough?
Total Comments: 8
Posted: Fri Sep 11, 2009 11:11 am Post Subject:
I'm sure you'd need to go through an underwriting process. Did you consult with your agent regarding this?
Posted: Fri Sep 11, 2009 12:13 pm Post Subject:
You need to set up a trust.
Posted: Fri Sep 11, 2009 10:18 pm Post Subject:
A trust is not the only way to accomplish this.
The best way is for to have a living trust (or at least a will that creates a testamentary trust for minor children) that covers all estate assets, and to name the living trust (or testamentary trust) as the beneficiary of the death benefit proceeds for the children’s benefit.
The second way to do this if you do not have/or want a trust is to put the following wording in the contingent beneficiary line of the applications...yes you read that right...write in the following exactly (with your info of course):
“Children of the insured in equal shares per stirpes; provided, however, if any beneficiary is under age 25, that beneficiary’s share shall be paid to (name of desired responsible adult) as Custodian for that beneficiary until age 25 under the (name of state) Uniform Transfers to Minors Act; Successor Custodian: (name of alternate desired responsible adult).”
Comments: (1) “per stirpes” means that if a child has died leaving issue, those issue will take the deceased child’s share “by right of representation”. (2) For death-time transfers, most states’ laws permit the Custodianship to last until age 25, but your own state’s law should be checked in this regard; of course, an earlier age can always be specified if desired. (3) Most states have adopted the Uniform Transfers to Minors Act, but some may still have a Uniform Gifts to Minors Act, which would have slightly different provisions; again, your own state’s law should be checked
Posted: Sat Sep 12, 2009 07:45 pm Post Subject:
Marpol, that's an interesting post since you basically said that instead of using a trust, a trust should be used.
A living trust is a trust.
A testimentary trust is a trust.
An UTMA account is a trust account with standardized language according to the state.
Posted: Sun Sep 13, 2009 05:26 pm Post Subject:
Interesting observation InsuranceExpert.
Even though an UTMA account is technically a trust with terms set in state statutes most people don't know this. The language I stated above does not actually create a trust it allows the carriers to cut a check to the custodian of a minor set forth in the beneficiary designation. This saves the client from having to go to court to get an appointed guardian.
The problem with minors in beneficiary designation are common and most people (and even most advisers) don't realize that you can put language and conditions in the beneficiary designation and not just a name of a person or entity.
Posted: Sun Sep 13, 2009 05:27 pm Post Subject:
Interesting observation InsuranceExpert.
Even though an UTMA account is technically a trust with terms set in state statutes most people don't know this. The language I stated above does not actually create a trust it allows the carriers to cut a check to the custodian of a minor set forth in the beneficiary designation. This saves the client from having to go to court to get an appointed guardian.
The problem with minors in beneficiary designation are common and most people (and even most advisers) don't realize that you can put language and conditions in the beneficiary designation and not just a name of a person or entity.
Posted: Sun Sep 13, 2009 08:05 pm Post Subject:
The language of the beneficiary designation doesn't create a trust, but the money will need to be deposited into an UTMA account which is a trust account.
That being said, you are making a good point. In my practice, the spouse is usually the beneficiary of the policy and I work with the owner's attorney for the wording that they want for the contingent beneficiary.
Posted: Fri Sep 11, 2009 11:11 am Post Subject:
I'm sure you'd need to go through an underwriting process. Did you consult with your agent regarding this?
Posted: Fri Sep 11, 2009 12:13 pm Post Subject:
You need to set up a trust.
Posted: Fri Sep 11, 2009 10:18 pm Post Subject:
A trust is not the only way to accomplish this.
The best way is for to have a living trust (or at least a will that creates a testamentary trust for minor children) that covers all estate assets, and to name the living trust (or testamentary trust) as the beneficiary of the death benefit proceeds for the children’s benefit.
The second way to do this if you do not have/or want a trust is to put the following wording in the contingent beneficiary line of the applications...yes you read that right...write in the following exactly (with your info of course):
“Children of the insured in equal shares per stirpes; provided, however, if any beneficiary is under age 25, that beneficiary’s share shall be paid to (name of desired responsible adult) as Custodian for that beneficiary until age 25 under the (name of state) Uniform Transfers to Minors Act; Successor Custodian: (name of alternate desired responsible adult).”
Comments: (1) “per stirpes” means that if a child has died leaving issue, those issue will take the deceased child’s share “by right of representation”. (2) For death-time transfers, most states’ laws permit the Custodianship to last until age 25, but your own state’s law should be checked in this regard; of course, an earlier age can always be specified if desired. (3) Most states have adopted the Uniform Transfers to Minors Act, but some may still have a Uniform Gifts to Minors Act, which would have slightly different provisions; again, your own state’s law should be checked
Posted: Sat Sep 12, 2009 07:45 pm Post Subject:
Marpol, that's an interesting post since you basically said that instead of using a trust, a trust should be used.
A living trust is a trust.
A testimentary trust is a trust.
An UTMA account is a trust account with standardized language according to the state.
Posted: Sun Sep 13, 2009 05:26 pm Post Subject:
Interesting observation InsuranceExpert.
Even though an UTMA account is technically a trust with terms set in state statutes most people don't know this. The language I stated above does not actually create a trust it allows the carriers to cut a check to the custodian of a minor set forth in the beneficiary designation. This saves the client from having to go to court to get an appointed guardian.
The problem with minors in beneficiary designation are common and most people (and even most advisers) don't realize that you can put language and conditions in the beneficiary designation and not just a name of a person or entity.
Posted: Sun Sep 13, 2009 05:27 pm Post Subject:
Interesting observation InsuranceExpert.
Even though an UTMA account is technically a trust with terms set in state statutes most people don't know this. The language I stated above does not actually create a trust it allows the carriers to cut a check to the custodian of a minor set forth in the beneficiary designation. This saves the client from having to go to court to get an appointed guardian.
The problem with minors in beneficiary designation are common and most people (and even most advisers) don't realize that you can put language and conditions in the beneficiary designation and not just a name of a person or entity.
Posted: Sun Sep 13, 2009 08:05 pm Post Subject:
The language of the beneficiary designation doesn't create a trust, but the money will need to be deposited into an UTMA account which is a trust account.
That being said, you are making a good point. In my practice, the spouse is usually the beneficiary of the policy and I work with the owner's attorney for the wording that they want for the contingent beneficiary.
Posted: Mon Sep 14, 2009 06:01 pm Post Subject:
I agree with you 100% InsuranceExpert.
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