When setting up a life insurance policy, it’s natural to want to name your children as beneficiaries. After all, you want to ensure they’re financially secure if something happens to you. But before you do, there are some crucial things you should know.
Can My Kids Receive the Money Directly?
Yes, you can name your kids as beneficiaries, but if they’re minors (under 18), they can’t legally receive the money directly. Instead, the funds might be held in a trust or managed by a legal guardian until they come of age. This can sometimes be complicated, costly, and might not align with your intentions for how the money should be used.
What’s a Better Option?
Many parents choose to set up a trust as the beneficiary instead of naming their kids directly. By doing this, you can appoint someone you trust to manage the money on your children’s behalf. You can also set specific rules on how the money should be used, like for education, healthcare, or other important needs.
If you name your kids directly, the money could be tied up in legal processes for years. Plus, when they turn 18 or 21, they might not be ready to handle a large sum of money responsibly. Setting up a trust allows you to ensure the money is managed according to your wishes and is available when your kids need it most.
Get Expert Advice Before Deciding
Choosing your beneficiaries is a big decision, and it’s important to get it right. At Rodriguez Wealth Group, we’re here to help you understand your options and make the best choices for your family’s future.
For more information on naming minors as beneficiaries and setting up a trust, check out this article from the Insurance Information Institute: https://www.iii.org/article/beneficiaries-your-life-insurance
If you need help with your life insurance policy, feel free to email us at team@rwealthgroup.com or call/text us at (813) 761-2836. We’re here to guide you every step of the way.