Life insurance payout to minor

The boy's legal guardian would usually be named the trustee of the boy's money. The dad would be the one spending the money, but there can be some oversight to protect the kid's interests if it's set up in advance. Basically, he'd have to prove a certain amount of the money went directly for the care of the child - food, clothes, mortgage, school, sports, etc.

If the father is estranged from both the boy as well as the mother then another family member, or social services agent, fearing the father may not spend the $$ wisely, may petition the court to appoint a guardian ad litem to administer the estate. Depending on the expected pay out, and how long it will last until the minor child is no longer considered a minor, the court may order the state to pay the guardian as litem's fee.

It also depends on the terms of the ins policy, which may pay out if the boy, with the aid of legal counsel, petitions the court for an order of "emancipated minor" status. This may happen especially if a Social Security benefit applies.

12's too young for emancipation. They have to be able to prove the ability to live on their own, and take care of their own monetary needs.

Social Security benefits for a deceased parent kick in at death, IIRC, and last until the child is 18 or out of school

jeseymour said:

How would a minor child receive a life insurance payout? Would the money be put in a trust fund, and how does that work? The insurance company would ask for guidance from the Probate Court in New Hampshire. Money would be placed in a trust fund, and would probably be committed to the child's college fund. But this would depend upon who takes care of the child and the amount of income available to support the child.

I'm working on a middle-grade story about a youngster who loses his mother, she was insured through work (maybe 100k.) In which case the payee would be probably her estate, but she may have named her son as the beneficiary. If it goes to her estate, the question then becomes does she have a will. Any competent attorney for someone requesting a will who has minor child(ren) will set up a trust within the will, determining who the trustee is and under what conditions the trustee can pay out from the trust. If she died without a will, the Court will determine this, and subject the trust to an annual accounting.

I'm assuming the insurance company wouldn't just pay the kid. No, and states have laws for dealing with this situation. It happens quite a bit.

Could the kid even be named as the payee? Absolutely, but he won't get the money directly.

Father is ex-husband, estranged, but will take custody of the boy. Father would not be named as payee. How would this work? Question to broad to answer. Basically guardianship/care of the child is different from what happens with the trust. Individual circumstances effect this a lot.

What exactly is a trust fund? A trust fund is when assets are placed under control of a trustee for the benefit of the recipient. Thanks for any help you can offer!

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jeseymour said:

Okay, only other family member is mother's mother, who hates the father, but is not willing to take the boy. She could serve as the trustee or both the father and grandmother can be joint turstees.

Is a guardian ad litem an attorney? Guardian ad litem is something different, and can be an attorney, but doesn't have to be.

Would they pay the father an allowance monthly to take care of the kid? The child would receive death benefits from Social Security which would go to the father. If child support was needed beyond that, the Probate Court and/or Trustee would set a monthly amount.

Would the father have to ask for a certain amount, or submit receipts or what? He would have to ask for a certain amount. Whether he gets it or not is another question. If the amount is reasonable, it's probably going to fly. Child support amounts would be as determined by the guidelines and won't require receipts. Major expenditures would.

Father was estranged from both mom and son, has not seen the boy since he was an infant. Father was in prison but has cleaned up his act and is willing to take the kid. No other relatives. Yeah, father would become custodian. He would not be appointed trustee because of the prison.

So when is there a social security benefit? Yes, as long as mom paid into social security. It takes a couple of months to get going.

Boy is twelve, isn't that too young to be an emancipated minor? New Hampshire has no provisions for emancipation, nor do many states. But twelve is way below the limit. However, if the boy is completely rejecting the father, there are options for custody.

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Best of luck,

Jim Clark-Dawe

The boy is 12? Survivor SSI would be part of his support but this would be eventually discontinued. The insurance could be paid out in segments to a guardian however, don't overlook the father's $$ responsibility. He's not off the hook. Depending on the father's means, the court could decide to have the ins held back until, or if the boy enters college.
Bottom line under the situation you describe, the court would not let the father near the $$. The situation for the boy's emotional state is fraught with danger. 100k is a lot of money and there are those who would be eager to pressure or otherwise influence a child to get it.

Usually in terms of a minor, the guardian or parent would have charge of the finances until that person was 18.

Actually, Emma watson, from Harry Potter, spoke about this a while back. She said she had an allowance of £50 a week, and one day her parents sat her down and had 'the money talk' with her. She said that until that point she had no idea how much money she had.

Incidentally, I have a friend who's father was killed in an accident when she was about 10. She didn't get anything until she turned 18, and then she got monthly payments from his life insurance.

I don't know what the details of that would have been though.

Random aside, but don't forget about mortgage insurance. If you're MC's mom had a mortgaged house, under certain circumstances insurance will pay off the balance of the mortgage leaving the house free and clear (and all the value of the house going to the kid if it's sold). My cousin got serious $$ when his dad died and the mortgage got paid off by insurance.

Kitti said:

Random aside, but don't forget about mortgage insurance. If you're MC's mom had a mortgaged house, under certain circumstances insurance will pay off the balance of the mortgage leaving the house free and clear (and all the value of the house going to the kid if it's sold). My cousin got serious $$ when his dad died and the mortgage got paid off by insurance.

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Here you have to take out life insurance when buying a house. I always wondered why, now I know.

shaldna said:

Incidentally, I have a friend who's father was killed in an accident when she was about 10. She didn't get anything until she turned 18, and then she got monthly payments from his life insurance.

I don't know what the details of that would have been though.

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That would have been some type of annuity situation, which would have been set up in advance with the choices for payout being made by the mother.