by mrsljb07 » Thu Oct 07, 2010 05:24 pm
Is it legal for minor children to sign off on a insurance policy even if its going into a trust? I thought the guardian would need to sign since they are minors. My aunt passed and had her 4 children as beneficiaries. Two adult and two minor. HR let the minors sign off on their part and put it in a trust for them. It seems as though since they were minors their guardian should have been there to make sure everything was okay.
Posted: Fri Oct 08, 2010 04:36 am Post Subject:
Minors do not have the legal capacity to "sign off" on anything. The money has most likely been placed in a trust for their benefit pursuant to state law. Unless the trustee violates his "fiduciary" responsibility, the money is being securely held for the children until they become adults (or used for their direct benefit between now and then). There should be nothing to be overly concerned about.
Posted: Sat Oct 09, 2010 08:21 am Post Subject:
It's sounds awful that a trustee can violate his fiduciary responsibility. Can you show us through some examples? Have you been through such instances as a professional?
Posted: Sun Oct 10, 2010 01:21 pm Post Subject:
I have not personally had any clients experience anything of the sort, but here's an example related to me a few years ago by an estate planning attorney friend of mine.
Single parent "A" died, leaving the proceeds of a $500,000 life policy in trust for her only child (age 10), and who was to be cared for, by prior arrangement, by her brother and his family (three kids). The trust was established, as it should be, "for the benefit of the child", and Uncle "B" was named as trustee.
A trustee is lawfully permitted to use the money/assets in the trust for the child's direct expenses (clothing, medical, educational, etc.) and usually permitted a small amount to himself for his "reasonable administrative efforts".
But Uncle B went beyond the bounds of "reasonable" by charging the trust $600 or more per month for "rent and utilities and food" to have the child in his home, used additional hundreds of dollars per month from the trust because "the child desired to treat his cousins, aunt, and uncle to a pizza party every week as a 'thank you for caring for me' gift", not to mention other lavish "gift giving" to his cousins, aunt, and uncle at birthday time and Christmas. And, of course, Uncle B charged about $500 per month for his "work" as the trustee.
Plus, Uncle B had a desire to play the "day-trader" game in the late 1990s, and ended up losing about $200,000 of the trust assets in the stock market through trading activities "as directed by the child".
Well, long story short, by the time the child reached age 18, and the trust "assets" were lawfully his to manage and/or use according to his preference, there was only about $15,000 or $20,000 for this nearly straight-A student to attend college with.
One of the other problems was that Uncle B was also manufacturing phony annual trust asset reports to the court which covered his "fiduciary crimes", and the depletion of the trust was unknown until the now-adult child made his own inquiry.
The whole thing ended up in civil court with the adult child suing Uncle B for all of the stolen money plus lost time value of money, and, obviously winning. To satisfy the judgment, Uncle B was forced to turn title to his home over to the child. And Uncle B was also charged criminally, and tried and convicted, for grand theft and other offenses. Aunt "C" was also charged with conspiracy and other crimes, turned "state's evidence" against her husband, and received a lesser sentence for her complicity in the affair.
Aunt and Uncle didn't need the house, since they were each given a new "residence" in the "big house" for the next 3-15 years (3-7 for her, and 7-15 for him), courtesy of the state.
It does happen.
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