Laura Berry is a former State Farm insurance producer and insurance expert.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com.

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Reviewed by Daniel Walker
Licensed Car Insurance Agent

UPDATED: Jan 12, 2017

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Don't miss these facts...

  • It is an important duty to leave a way of financial support for children in case you pass away unexpectedly while they are minors.
  • Courts will get involved if you have made a child or children the beneficiary with no adult appointed to oversee the money.
  • Consider making a trusted friend or family member the guardian and beneficiary.
  • Create a living trust that details your wishes and who you want to oversee the finances.
  • State custodianship of the life insurance money by initiating a UTMA Trust.
  • Begin a Child’s trust that allows you to state when and how much money each child gets after the age of 18.


Most often life insurance is purchased by a parent as a way to ensure that a family is not left in the financial hole should you pass away unexpectedly.

In cases where there is a divorce, oftentimes the desire to leave a spouse as the beneficiary changes.

The question arises as to whether you can make a minor child or children the beneficiaries of a life insurance policy.

The answer is “yes,” but you watch out for the pitfalls and make sure that you have prepared all of the legal documents necessary to guarantee the money is used for the care and provision of the children.

Learn more about beneficiaries below and make sure to use our free comparison tool above!

Importance of Leaving a Financial Support System for Kids

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No parent wants to be consumed with thoughts of passing on and leaving their children without a means of provision, but it is far worse to stay unprepared.

Accidents and illnesses happen every day and the better prepared you are for a major life upheaval, the more peace of mind you will have in the here and now. There is no denying that it costs money to raise children.

The more there are, the more money it takes to provide even the bare essentials.

Some families are financially blessed and they know that a wealthy relative can step in and finish the job of getting them through childhood, teen years and hopefully through college if the worst were to happen.

Not every family is in this same position. There are real concerns when it comes to the idea that your income they are so dependent on could vanish in an instant. It is important to plan for their financial well-being now.

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The Hard Facts About Minors and Money

You can add minor children as beneficiaries to your life insurance policy, but if you pass away there is no judge that will allow the insurance company to send them the money without a named supervisor through court hearings.

It will cost a lot of money in legal fees, which dips into the amount of money you are trying to leave your child.

It is prudent and sensible to take the time and look at the available options to have a guardian or overseer of the funds in the chance that you might pass away before they turn 18.

It is not that time consuming or expensive to have a solid plan put on paper that everyone will have to adhere to and gives you comfort knowing you have thought of every detail to make the transition as smooth as it can be.

Make a Trusted Guardian the Beneficiary

A close family friend or relative that you completely trust to care for your children if you pass away is the perfect candidate to place as guardian over the money.

You can add them as your beneficiary to your policy and they money will be given to them after you die.

The only problem with this arrangement is that even if they are to spend the money on your children ethically, there is no law that binds them to this agreement once you are gone.

They can take the money and leave your children high and dry. Consider this option with care and due diligence.

Create a Living Trust

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One of the best ways to exercise a bit of control over who handles the affairs of your children after you are gone is to create a living trust.

These are legal documents that spell out your wishes in every aspect of your estate and finances, including who will be the custodian of the finances that are left for minor children.

This is a smart legal move to make and everyone has to abide by your wishes.

Make sure to give copies to your insurance provider if you decide to use this option. Without this legal paperwork in their hands, it could end up in the courts. They need to know exactly who you have designated to send the money to.

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Establish Custodianship Through a UTMA Trust

Creating a UTMA Trust (Uniform Transfers To Minors Act) is a pain-free way to have a custodian designated to receive the life insurance benefits and oversee that they are being spent as they should.

The custodian can be the surviving spouse, but it can be an outside party as well.

The benefits of the UTMA Trust are that it is recognized in most states, the transferal of remaining funds to the minor at age of adulthood is easier and most financial institutions recognize the Trust.

There are no tax forms for the custodian to file, but the child will have to fill out an annual form that details all money that was given.

Create a Child’s Trust

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A child’s trust is the better option if you are leaving a large sum of money in life insurance and assets that will not easily be spent down by the time they reach age 18, 21 or 25.

A UTMA Trust transfers the remaining funds to the grown child automatically at the age specified by state law. A child’s trust can be set up to offer part at a designated age with the remainder at a later time.

As an example, you can designate the child to receive $200,000 at age 18 and the remainder at age 21 or 25.

This allows for a more frugal approach so that they will not go through all of their money right away. With age comes wisdom and the slight break can make the difference in seeing them off in life successfully.

Discuss the available options with both your insurance company and a legal expert.

You are sure to find the perfect solution and get peace of mind knowing that the future finances of your minor children are in good hands.

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