I know leaving life insurance directly to minors by their name only is terrible, but what's the best way other than leaving it to a living trust? Is it something like you designate it as going to "Trusted Adult Name, relationship to self, as custodian for Minor Name, under the CUTMA"?
My goal is that the custodian not be subject to all sorts of restrictions or oversight by the court and can use the money however we've asked them to (we're assuming a high degree of trust here). I also want to be able to keep our kids from potentially being harmed by receiving a lump sum when they turn 18 so I want it to be able to be distributed over time as well. I know that a living trust is the best, and we're hoping to get that done within the next month or two, but it's been dragging out so I wanted to do this in the meantime.
You should have a trust, and there really isn't another good option. If you read the policy language there is good chance that the policy states that if the proceeds are payable to a minor (usually defined as age 21 or 25) they are held in a custodial (UTMA) account (or California state law equivalent).
This is not legal advice nor intended to create an attorney-client relationship. The information provided here is informational in nature only. This attorney may not be licensed in the jurisdiction which you have a question about so the answer could be only general in nature.
I agree with Attorney Zelinger. If you do not leave the assets to your children in a trust, they will likely receive them before they are able to properly manage them. Ask yourself this: would you rather spend $1,500 on a carefully drafted trust that takes care of your kids or have them squander their insurance proceeds shortly after your death? If you need extra inspiration, please watch the movie "Hangover" and think about your kids in Vegas with your insurance money. The odds are you'll then pay an experienced California lawyer to prepare a properly drafted trust. Good luck to you and your family.
This information is presented as a public service. It should not be construed to be formal legal advice nor considered to be the formation of a lawyer/client relationship. I am licensed in Connecticut and New York and my answers are based upon the law in those jurisdictions. My answer to any specific question would likely be different if I were to review a client's file and have the opportunity to interview the client. Accordingly, I strongly urge you to retain an attorney in your jurisdiction with respect to any legal matter.
The trust is really the only way to accomplish all of your goals and avoid tax consequences. Why is the trust taking so long? I would recommend trying to speed that process up and get it done right the first time. Good luck to you.
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