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Could I get some clarity on what happens when a child is the beneficiary. What happens to the money. Will the child eventually get it?
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Could I get some clarity on what happens when a child is the beneficiary. What happens to the money. Will the child eventually get it?
It works a little different than that. If the child is named the beneficiary, the insurance company will not release funds to a guardian without a court order....Insurance companies just write a check to whoever is the responsible party. What they do with it is someone else's responsibility.
I don't see any parent naming a child as beneficiary when the spouse is living.Wow. Lots of options here. Thanks for the info, but I'm even more confused now.
So for a divorced couple and the insured doesn't want the other parent to get the money then a trust would be the best option?
A married couple that names children as contingents. The money would go to the court appointed guardian?
I don't see any parent naming a child as beneficiary when the spouse is living.
If the children are contingent, the guardians will have to deal with what I posted earlier.As a contingent. Should the couple die together in say a car accident.
It works a little different than that. If the child is named the beneficiary, the insurance company will not release funds to a guardian without a court order.
This means that if the guardian wasn't a beneficiary or co-trustee of a testamentary trust for the child, the guardian would have to make account of every dime spent for the benefit of the child and then petition the court for reimbursement from the insurance company.
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Either establish a testamentary trust (not a big deal, added to the will) with the guardian named as co-trustee along with a bank trustee perhaps. Parents set the discretionary powers given to the trustee.
Or... if the parents trust the guardians to do the right thing, just name them as contingent. this isn't fool-proof because the guardians could still use the money in a way the parents wouldn't have wanted. Also, the proceeds will become assets of the guardians and exposed to suit and creditors if something bad happens.