Now That You Have Life Insurance
© 2009 Justin Dituri, Dituri Law Offices, P.C.
Some Ideas On How To Protect The Valuable Gift You Have Purchased For Your Family
Congratulations on protecting your loved ones, for buying a life insurance policy.
Your agent probably asked you who you wanted to receive the death benefit. You probably said your spouse. And if you spouse is not alive when you die? Not an easy thing to think about, but it could happen. You would probably then want your children to get the death benefit. But, will that work?
If your kids are younger than eighteen when you and your spouse die, the insurance company will not give the money to them. The company will want to give it to an adult to hold for the children. If you do not make it clear who you want holding your children’s money, it may end up creating a costly and time consuming hassle.
Many people name a Guardian for their minor children in the event of their untimely death. It is usually not a good idea for the children’s Guardian to also be the Custodian of their funds. This is because the Custodian has a strict duty to not use the funds for their own benefit. But, sometimes it is necessary for a Guardian to have additional funds to assist them caring for a minor (to fix up an additional room in their house for example). If the Custodian of the funds is someone other than the Guardian, than there is no conflict for the Custodian to choose to make that distribution.
The best way to assure that there will be no problems is to make provisions for a trust for your children. You can, in a will, name both a Guardian (someone to take care of the children), and a Custodian (someone to hold your children’s money). You can also make provisions for how long the Custodian will hold the money (until the children are eighteen, twenty one, etc.). There are many options for how something like this can be put together.
You should spend some time with an attorney who focuses their practice on wills and trusts. Take advantage of an attorney who will take some time to counsel with you, and explore different options for structuring a trust for your family. Avoid boiler-plate documents which often create a one-size-fits-all structure which may not be right for your family and which you may not understand.
Mr. Dituri is