minor as beneficiary for life insurance

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frog11
Posts: 8
Joined: Tue Feb 07, 2017 10:53 pm

minor as beneficiary for life insurance

Post by frog11 » Mon Jan 13, 2020 10:22 pm

I am in my 40s with a 10 year old. I purchase a term life insurance several years ago and listed my child as beneficiary as I did not have my will/trust done yet. Now I am trying to decide between testamentary trust and living trust with my child as the sole beneficiary. Any advice is appreciated.

I do have a spouse with adult step kids etc. I live in a community property state(TX) and bought this policy to make sure my child will be protected to some degree should I die first.

Royal Blue
Posts: 24
Joined: Wed Dec 18, 2019 4:07 pm

Re: minor as beneficiary for life insurance

Post by Royal Blue » Mon Jan 13, 2020 10:35 pm

frog11 wrote:
Mon Jan 13, 2020 10:22 pm
I am in my 40s with a 10 year old. I purchase a term life insurance several years ago and listed my child as beneficiary as I did not have my will/trust done yet. Now I am trying to decide between testamentary trust and living trust with my child as the sole beneficiary. Any advice is appreciated.

I do have a spouse with adult step kids etc. I live in a community property state(TX) and bought this policy to make sure my child will be protected to some degree should I die first.
I would get a simple trust and a will set-up ASAP. I would consult with an attorney for details/recommendations. Should cost you around 3-5K. Have the trust as a beneficiary, depending on the dollar amount of the policy (north of 1mil+) I would set up uses and restrictions in the trust. Also I would think who would be a good trustee, perhaps your wife and a co-trustee.

bsteiner
Posts: 4501
Joined: Sat Oct 20, 2012 9:39 pm
Location: NYC/NJ/FL

Re: minor as beneficiary for life insurance

Post by bsteiner » Mon Jan 13, 2020 10:52 pm

Or a Will that provides for him in trust.

Spirit Rider
Posts: 12192
Joined: Fri Mar 02, 2007 2:39 pm

Re: minor as beneficiary for life insurance

Post by Spirit Rider » Tue Jan 14, 2020 10:06 am

A testamentary trust in a will is more than sufficient for your needs, if you are not going to put assets in the trust while alive. Search @bsteiner's posts on this subject. He is a nationally recognized estates and trusts attorney.

The provisions of both can be as simple or complex as you want, although trust simplicity and flexibility are their own virtues. The major difference is a trust in a will goes through the probate process and will at least initially be administered by the probate court.

In my state the trustee of a testamentary trust must apply for appointment, file a initial accounting and at least one full year accounting. Then with the assent of the beneficiary petition the probate court to remove future administration. Depending on the size and type of assets. Most probate court judges like two see two (2) - three (3) years of accounting before granting the petition.

I have been a trustee of both types of trusts and am currently still a trustee of a testamentary trust for another ten (10) years. Personally, I think testamentary trusts are better in my state. The initial probate court administration requires the trustee to get their ducks in a row. Then there is court supervision for at least the first year.

There is no such requirement on a living or irrevocable trust in my state. The trustee acts entirely without supervision. I have opted for testamentary trusts based on @bsteiners recommendations. Trust but verified (pun intended).

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