Should a minor child be named as a beneficiairy of life insurance proceeds?

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Written by Jeffrey Johnson
Insurance Lawyer Jeffrey Johnson

UPDATED: Feb 20, 2013

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If you name a minor child as a beneficiary of life insurance proceeds, the insurance company cannot pay money to the minor child. Depending on the state, the company would hold on to the money (at interest) until the child turns 18, or pay it to a court-appointed custodian or local bank (where it may be held at even lower interest). Where the amount of proceeds would be significant, it often makes sense to have a lawyer create a trust for the minor and have the proceeds payable to the trustee for use according to the terms of the trust.

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