Beneficiary 10 YO, Single Parent Seeks Non Trust Solution, if Possible

[yorkriver1]

First words from prospect, yes, get me life insurance ASAP. I don't want anyone but my child to get the money, but how do we set it up, since the child is a minor?

I was interrupted when I said trust; "My lawyer is so expensive, do I have to spend thousands of dollars to get this in place?"

This is not a wealthy person, a single parent. I am on hold now with my carrier's admin team that deals with beneficiary issues.

Your experience is welcome!

 

[Larry Tew]

If they don't want to create a testamentary trust through their will, they could name the guardian of the child as the beneficiary. Bear in mind that the beneficiary would have complete control of the proceeds. But if there is a high level of trust there, it could work as a 2nd option to the trust.

 

[Tahoe Ray]

The trust is still likely the best option but setting up an UTMA and naming the child's potential guardian as the custodian is a less expensive (and less flexible for a number of reasons) strategy.

 

[yorkriver1]

OK, good feedback. I checked with the Advanced Sales team at my life carrier. Same suggestions. Just read about UTMA, and a comment was made that assets in that mode might hurt potential for college financial aid. Kind of tall weeds.
If there's enough life insurance, we won't worry about college aid, I guess.
Finding a trustworthy UTMA custodian may be the challenging part.
Also, it was suggested that a guardian in place of the parent can be separate from the UTMA custodian, and maybe the best choice, due to possible conflict of interest/moral hazard.

 

[Tahoe Ray]

OK, good feedback. I checked with the Advanced Sales team at my life carrier. Same suggestions. Just read about UTMA, and a comment was made that assets in that mode might hurt potential for college financial aid. Kind of tall weeds.
If there's enough life insurance, we won't worry about college aid, I guess.
Finding a trustworthy UTMA custodian may be the challenging part.
Also, it was suggested that a guardian in place of the parent can be separate from the UTMA custodian, and maybe the best choice, due to possible conflict of interest/moral hazard.

The financial aid consideration must be taken into account but as you pointed out, that problem can be solved with the proper face amount.

Having two people involved can be great however now she has to find them...easier said than done. One of them she trusts to raise her kids and a second person that she trusts with the money.

Hopefully it works out. Good luck.