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Your Estate Plan and Your Minor Children

Do Not Leave Money to Minor Children


Do you have a Life Insurance, a 401(k) Plan, an IRA, or an Annuity and have you named your spouse as the primary beneficiary of these assets and your minor children as the contingent beneficiaries of these assets?  If so  you have inadvertently left money to your minor children in the event of the death of you and your spouse before your child reaches  the age of 18. 


Contract Rights


Your Life Insurance Policies, 401(k)’s, pension plan, IRA’s , Annuities and other pay on death designations for bank accounts and securities, in addition to jointly held bank accounts allow the transfer of assets outside the probate process.


While this is a quick and easy way to transfer assets to adults, the result is not the same for minor children.  The law defines a minor child as one  under the age of 18.


Money left outright to a minor child will be held for the child and supervised by the court system through the guardianship process.  The guardianship process limits the way funds can be used for the minor’s benefit and requires an annual accounting to the Commissioner of Accounts.  Once your child or grandchild reaches his /her 18th birthday the money will be their’s!


Take These Easy Steps to Avoid this Result


Gather all of your recent statements for your Life Insurance Policies at work and any individual policies you own.  Also gather your 401(k)’s, IRA, and Annuities.


Review your current beneficiary designations and revise them if necessary.


Check with your bank and brokerage firm to determine whether you have signed any transfer on death designations.   Review and revise as necessary.


Revise the Contingent Beneficiary Designation


Many of our clients designate their spouse as the primary beneficiary of their insurance and pension plans. 


It is the contingent beneficiary designation that must be changed if you have children under the age of 18.  Page Two of this newsletter contains language that you can use to be sure that the money from your life insurance, pensions, IRA’s 401(k)’s and Annuities flows into the trust established for your minor child in your Last Will and Testament or Revocable Trust.


Name the Office NOT the Person


In naming the contingent beneficiary you must name the office of Trustee and not the person you nominated as the Trustee in your document.


If you name a person, for example, my sister, Sue Smith, as the contingent beneficiary, the money goes to Sue Smith in her individual capacity and does not go into the trust you established for your minor children.


To avoid this unintended result use the language below.


Language for the Contingent Beneficiary Designation


To the Trustee of the Trust established under my Last Will and Testament.




To the Trustee of the My Name Revocable Trust established [date you signed the trust] and any amendments there to.

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