Is It Okay To Put A Minor As A Beneficiary?

​As you begin to plan for your death, you should develop an estate plan that allows you to identify beneficiaries. If you are a parent, you will most likely wish to designate your kid as the beneficiary, believing they will have a secure future.

However, naming a child as a beneficiary on a life insurance policy might result in severe issues. And here are the reasons why:

1. Inaccessible
   Children at a minor age can't receive the proceeds of a life insurance policy immediately. They must be at least 18 or 21, depending on the state. 
   
   Before that, a judge appoints an adult to administer the finances on behalf of the juvenile. That guardian would then decide how the money is managed and spent, which may or may not follow your preferences.
   
   
2. Expensive 
   When your child reaches legal age and is ready to receive the funds, the procedure of transferring it might be rather costly. Your child should pay for both the court costs and the attorney fees.
   
   Instead of being put to greater use, they may spend a portion of the money for the transfer procedure. Additionally, this procedure may take quite a while. 
   
   
3. Government Support Jeopardy
   If you care for a special needs child or adult, inherited assets from you or anybody else may jeopardize their government assistance. It may disrupt the care and support services they rely on for daily and future care.

Alternatives to Naming Your Minor as Beneficiary
Don't be disheartened if you can't directly designate your child as a beneficiary on your insurance policy; there are other alternatives to assist them in protecting their future:

1. Create a Trust
   Creating trust will greatly assist you in gaining control over what happens to the money your kid may receive when you pass away. You can, for example, ask the trustee to pay for your child's schooling and living expenses. You may also establish a monthly stipend for them.
   
   You may also specify a time when they will be able to access their cash independently. For example, you may give it to your child whenever they graduate from college or get their first job.
   
   
2. Select a Trusted Adult
   Another alternative to naming your child as a beneficiary is selecting a trusted adult who can manage the fund until your child hits legal age. The selected adult is the spouse or an immediate family member, most commonly.
   
   Choosing a trustworthy adult will save your kid money on legal expenses and the time-consuming transfer process. However, be cautious about who you choose as the beneficiary because money may be the source of all evil. And you'll never know if your child receives the resources you worked so hard for to provide them with a stable future.

Conclusion
It may be tempting to name your kid as your beneficiary, but the consequences may cause problems for your child. Instead, consider alternatives such as establishing trust and naming a trusted adult as your beneficiary.

At Leigh Insurance Agency, we aim to provide comprehensive insurance policies that make your life easier. We want to help you get the insurance that fits your needs. You can get more information about our products and services by calling our agency at (904) 826-0799. Get your free quote today by CLICKING HERE.  Any coverage discussed is not guaranteed. Contact us today to go ove