Be Careful When Naming Minors as Beneficiaries

by | Aug 26, 2021 | With Your Family in Mind

Most people want to pass their assets to their children or grandchildren, but naming a minor as a beneficiary can have unintended consequences. It is important to make a plan that doesn’t involve leaving assets directly to a minor.
There are two potential issues with naming a minor as the beneficiary of a life insurance policy, retirement account or your estate plan. The first is that a large sum of money cannot be left directly to a minor. Instead, a court will likely be required to appoint a conservator to hold and manage the money for your children. Such a court proceeding can be expensive, and the appointed conservator may not be someone you want to oversee your children’s money. Moreover, the conservator may be required to file annual accountings with the court, generating more costs and fees.
The second issue with naming a minor as a beneficiary is that the minor will be entitled to the funds from the conservator when he or she reaches the age of 18. There are no limitations on what the money can be used for, so while you may have wanted the money to go toward college or a down payment on a house, the child may have other ideas.
The solution to these issues is to create a revocable trust and name the minor(s) as beneficiary of the trust. A trust ensures that the funds are protected by your appointed trustee for your children until a time of your choosing, as you specify in your trust. With a trust, you are in charge in determining how and when your estate will be utilized on behalf of your children. The trust can be customized to state any number of specifics such as specific age requirements your children must reach before they are to receive their allotted share of your estate, or distribution can based on a specific event, such as graduating from college. You can also spread out distributions over time in several separate installments to children and grandchildren.
If you do create a trust, remember to name the trust as beneficiary of any life insurance and possibly retirement plans as well. If you forget to take that step, the money may be distributed directly to the minor, negating the work of creating the trust.
For more information please contact the Law Office of Sean D. Ethington at (661)295-4604 or visit our website at

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