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It is EXTREMELY IMPORTANT to properly name your beneficiaries in your life insurance policy!! Ruth and I are working on a case where a grandfather named his 4 minor grandchildren as beneficiaries of his policy. After he died, the parents came to us to set up a trust for their children using the proceeds of the life insurance policy.

However, since the parents were not named as guardians of the children on the policy, the insurance company would not release the funds to them without being appointed as guardians by the local court. So, the parents had to take classes to learn their responsibilities as legal guardians before the mother was appointed. But the court further required that the insurance proceeds get deposited into "blocked accounts", which severely restricts the ability for the guardian to access the funds for the kids without court approval. Further, the funds will be distributed to the children outright when they turn eighteen negating the purpose of future planning.

After 1 1/2 years since the clients came to see us, we're getting close to the end of the process, but this could all have been avoided if "Grandpa" got proper advice in the first place! If you have any questions about naming your beneficiaries, please contact us!
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