The Right Way to Leave Life Insurance to Minor Children

Life insurance is one of the most thoughtful financial gifts a parent can provide. But how you structure that inheritance matters enormously — especially when children are young.

Children under 18 cannot legally receive large sums of money. If a minor is named as a direct beneficiary on a life insurance policy, the insurance company cannot pay the funds directly to the child. Instead, a court must appoint a property guardian to receive and manage the funds on the child's behalf. This court process is costly, slow, and imposes ongoing court supervision. The child automatically receives any remaining funds at age 18 — whether they're ready for it or not.

Better alternatives: Name a trust as beneficiary — the trustee manages and distributes the funds according to your instructions including provisions for education, staggered distributions, or other conditions. Establish a Uniform Transfers to Minors Act (UTMA) account with a named custodian who manages the funds until the child reaches the designated age. Name your spouse as primary, the children's trust as contingent.

📌 Life insurance is only as effective as the plan behind it. Let's make sure your policy is structured to actually benefit your children the way you intend.