How can life insurance money be left to child's potential guardians in a manner of our choosing?
In the case of my wife and I both dying, our child will obviously be living with someone else. What we want to know is, how can our life insurance money be given out in a way of our choosing, via our wills?
For example, five percent to the new guardians up front, just because. Twenty percent into a college fund. Twenty percent to be given to the child upon reaching the age of 21. The rest to be doled out evenly, on a monthly basis to the guardians, for providing necessities.
First of all, is it possible to dictate any rules like this? Second of all, is there any advice on specific ways that might be better than the one I stated above?
Thanks for the advice.
- AnonymousLv 71 decade agoFavorite Answer
If you want your life insurance money to be given away via your wills, you need to make your estate the beneficiary. HOWEVER, before it can be given away, it must first pay off your debts, which means, theoretically, that there wouldn't be any left to give away.
Sounds like what you REALLY want to do, is set up a trust, and fund the trust with the life insurance policies. Then the instructions for the trust - NOT via a will - would say, five percent here, twenty percent there, etc.
- Chris CLv 61 decade ago
A Will is public knowledge and is contestable in court, so don't waste your time with that. Here's why...any Joe Blow can see it posted in the newspaper that you croaked and had a Will. They show up to the Will reading and say that you were long lost buddies and you promised him 1/3 of your estate back in the day. Then it goes to a court battle and chances are that person will get "go away money" (a settlement) and will end up still getting money from your estate that should go to the kids.
Set up a family trust and have the insurance money go into the family trust. This will cover the college fund and the 20% lump sum to each. You can more or less set whatever rules you want for the trust, like that there can not be any withdrawals prior to the childs age of 21 other than for college or whatever. As for the monthly payouts, an annutiy will over that just fine.
Contact a life insurance broker and a lawyer and have them work together to set these things up fro you.Source(s): Financial Advisor in Canada.
- Anonymous1 decade ago
Don't name a will a beneficiary because you just increased your probate costs.
Ideally you could set up a trust and name a trust as a beneficiary, but that's not exactly an inexpensive task.
You may be able to accomplish some of the same goals with a well-crafted beneficiary form. Some will allow you to designate payouts as you described...to an extent anyway.
- LucyLv 71 decade ago
I believe you would need an attorney to set up a trust.
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- BubLv 71 decade ago
See an attorney, they can set up an annuity, or a trust, or however you wish to do it.