Be Careful Not to Name Minors as Your Estate Plan Beneficiary

Most people want to pass their assets to their children or grandchildren, but naming a minor as your estate plan beneficiary can have unintended consequences. It is important to establish a plan that doesn’t involve leaving assets directly to a minor.

There are two main problems with naming a minor as your life insurance policy, retirement account, or estate plan beneficiary. The first is a large sum of money cannot be left directly to a minor. Instead, a court will likely have to appoint a conservator to hold and manage the money. The court proceedings will cost your estate, and the conservator may not be someone you want to oversee your children’s money. Depending on the state, the conservator may have to file annual accountings with the court, generating more costs and fees.

The other problem with naming a minor as your estate plan beneficiary is that the minor will be entitled to the funds from the conservator when he or she reaches age 18 or 21, depending on state law. 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 way to get around these problems is to create a trust and name the minor as beneficiary of the trust. A trust ensures that the funds are protected by the trustee until a time when it makes sense to distribute them. Trusts are also flexible in terms of how they are drafted. The trust can state any number of specifics on who receives property and when, including allowing you to distribute the funds at a specific age or based on a specific event, such as graduating from college. You can also spread out distributions over time to children and grandchildren. 

If you do create a trust, remember to name the trust as beneficiary of any life insurance or retirement plans. If you forget to take that step, the money will be distributed directly to the minor, negating the work of creating the trust. 

For more information about estate plan beneficiary choices, please click here.

To create a trust, be sure to consult with your attorney.  It is extremely important to talk with your attorney before creating any estate planning or legal documents, especially a document such as a trust.  Consult with the estate planning attorneys at Elville and Associates to make sure you have all the estate planning and legal documents you need.  The firm offers free consultations for estate planning clients to understand your situation and goals and create a path forward for your family and you, offering peace of mind along the way.  To set your initial consultation, contact Legal Administrator Mary Guay Kramer at, or by phone at 443-741-3635.  Or, reach out to Community Relations Director Jeff Stauffer at, or by phone at 443-393-7696 x117.



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