Deadly Sin #5: Do Not Name Minor Children as a Beneficiary
Roman and Maria were happily married with a 13 year-old-son Nick. Roman and Maria decided to take little road trip for their 10- year wedding anniversary. The couple would meet their demise from an oncoming semi-truck whose driver had fallen asleep at the wheel. Roman and Maria were struck head on, and the romantic pair passed away.
Thankfully Nick was staying with his grandparents, but unfortunately, Nick was named as the contingent beneficiary. During this time, no one was appointed guardianship, and since the insurance company can’t pay out death benefits to a minor without guardianship, Nick’s grandparents did not have the money to cover the additional expenses for Nick’s care and the probate costs for Roman and Maria’s estate.
Roman and Maria should have created a trust for the benefit of their minor child. You should do the same. Doing so will give you the ability to put restrictions on how funds are distributed, like minimum age or college graduation.
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