Kids as beneficiaries

[Anonymous]

I need to update all of my beneficiaries for life insurance and financial accounts. DH is #1, and for #2 I would like my 2 kids (equal shares). I know that kids can't hold property until age 18. Does everyone have a trust in case the kids are minors and both parents die? Or do you just name both kids as secondary beneficiaries and hope that both parents don't die while they are minors?

Sorry, because this is upsetting to think about AND complex, I have put it off for a long time. Breaking it down in simple steps for me would really help. Thanks so much!

[Anonymous]

You can name your kids directly as your beneficiaries on your accounts, but you should also have a will that names a person who gets physical custody of your kids if both parents die and a person who is the financial executor of your estate and would manage your children's money until they turn 18 (or another age that you designate, often 21 or 25.) These two roles can be combined into one person if you trust that person to manage the children's money wisely. We have DH's brother named in both of these roles.

[Anonymous]

PP here. You should have a lawyer help you draw up a will. A basic will will cost you about $1200, and a lawyer will often allow you to update the will every once and a while (more kids, more money, etc) for a small fee. Then, make sure that several people know where there is a copy of the will, the name of your lawyer, and the people named as custodian and executor should have copies sent to them.

[Anonymous]

Before we we had a will we used "[relative's name] as custodian for [child's name] under the [state's name] uniform transfer to minor act".

There is a helpful article here that explains how the Uniform Transfer to Minors Act works for Maryland (despite its name it's not perfectly uniform across the country), and gives possible language for beneficiary designations--

http://www.avvo.com/legal-guides/ugc/use-the-maryland-uniform-transfers-to-minors-act-to-provide-life-insurance-proceeds-for-children

[Anonymous]

We set up a trust with payouts at 25, 30, and 35. We purchased a 20 year term policy when the kids were young to basically cover if something unforeseen happens to both of us. I know a few kids that came into small sums of money at 18 and for the most part they wasted it within a year and years later wished they had spent it differently. We will revisit things again once the kids are adults.

[Anonymous]

Anonymous wrote:We set up a trust with payouts at 25, 30, and 35. We purchased a 20 year term policy when the kids were young to basically cover if something unforeseen happens to both of us. I know a few kids that came into small sums of money at 18 and for the most part they wasted it within a year and years later wished they had spent it differently. We will revisit things again once the kids are adults.

+1 just signed all the docs last week.