Life insurance is a must for anyone who has children. It gives parents the all important peace of mind that their children will be taken care of if the parent unexpectedly dies.
In my years as an estate planning attorney I have met with hundreds of parents between the ages of 25-45 and most of them do not have a large estate. They are still in the first 10 years of their mortgage or they are renting, they have minimal savings and typically are living paycheck to paycheck. They do however have some form of life insurance. Whether it is a benefit from their employer or they are paying for it out of pocket, I find that the average parent has between $100K-$250K of life insurance for their spouse and children.
The most common question I receive from these parents is "what happens to the money if I die and the life insurance pays out to my underage child?" Without setting up a trust, the money would be held in a conservatorship account and the court would appoint the conservator to look after the money. Once the child turns 18 any money left in the conservatorship account is given to the child.
So what happens when you give an 18 year old $100K? Do you feel that smile on your face? The story of a child inheriting a large sum of money on their 18th birthday and having nothing to show for it a couple years later is a common one. This is why I have created the Life Insurance Trust.
My Life Insurance Trusts accomplish one main goal. Protect your children from themselves and other shady characters who might come along after they inherit money. When you set up a Life Insurance Trust you name the trust as the beneficiary of your life insurance policy and if you die, the life insurance pays into your Life Insurance Trust. You also choose one or two people who will be in charge of the money, called the Trustee. The Trustee will invest the money wisely and use it for your child's health, education and support. However, when your child turns 18 they do not inherit whatever is left over. The trust continues to hold the money until the child is responsible enough to handle that kind of money.
So how much does it cost for a lawyer to set up a Life Insurance Trust? At $350, I have intentionally made these trusts affordable for the working parent. This fee includes a telephone or in-person consultation with me to address any questions you might have and to take the information on your children and trustees that I need to create the trust. You are then emailed a copy of the Life Insurance Trust along with instructions for signing and funding the trust. Click here to be directed to our legal services menu.
If you are interested in setting up a Life Insurance Trust, please contact me through the contact section below or feel free to call me at 602-840-4101 or email me at Jeff@jdlynchlaw.com.
If you are divorced, have kids and Life Insurance... you should see how a Life Insurance Trust can protect your Children.