Will or Trust to ensure Life Insurance proceeds are used for kids higher education

[rphilli9]

What is the name of your state? PA

Should I die, I want to give my minor kids a portion of the proceeds from a life insurance policy but want to restrict their use of the money to higher education, at least in the early years (18-26). How can this best be accomplished without dragging the proceeds through probate?

What is the name of your state? PAWhat is the name of your state?

 

[moburkes]

What is the name of your state? PA

Should I die, I want to give my minor kids a portion of the proceeds from a life insurance policy but want to restrict their use of the money to higher education, at least in the early years (18-26). How can this best be accomplished without dragging the proceeds through probate?

What is the name of your state? PAWhat is the name of your state?

Proceeds of a life insurance policy pass outside of probate. The EASY answer is to leave the money to someone who you KNOW will spend it on their education. Less easy: a Trust.

 

[nextwife]

Proceeds of a life insurance policy pass outside of probate. The EASY answer is to leave the money to someone who you KNOW will spend it on their education. Less easy: a Trust.

I disagree. If she wants if to benefit the kids, she needs to NOT leave it "to" someone else. AS a trust alternative, I wonder if she could start a 529 plan for each, and name their 529s as the beneficiary?

 

[moburkes]

I disagree. If she wants if to benefit the kids, she needs to NOT leave it "to" someone else. AS a trust alternative, I wonder if she could start a 529 plan for each, and name their 529s as the beneficiary?

I said it was the EASY answer, not the best answer. I'm not sure if that is the right place either. If it is NOT used for education (say, the kids refuse to go to college or drop out), you can't remove it from the 529 plan.

 

[nextwife]

I said it was the EASY answer, not the best answer. I'm not sure if that is the right place either. If it is NOT used for education (say, the kids refuse to go to college or drop out), you can't remove it from the 529 plan.

Perhaps a ROTH IRA, then.

I'm just REALLY against the idea of "leaving" something to a third party based on them using it for someone else. These forums are FULL of posts from people whose parent left everything to one child, one sibling, new spouse, etc. based on some inaccurate presumption that the receiving party would then use that inheritance the way the decedant WANTED them to.

How many times have we seen variations on: My mom died and left everything in her husband's name, but we knew she meant for him to divide it between us....."

 

[moburkes]

Perhaps a ROTH IRA, then.

I'm just REALLY against the idea of "leaving" something to a third party based on them using it for someone else. These forums are FULL of posts from people whose parent left everything to one child, one sibling, new spouse, etc. based on some inaccurate presumption that the receiving party would then use that inheritance the way the decedant WANTED them to.

How many times have we seen variations on: My mom died and left everything in her husband's name, but we knew she meant for him to divide it between us....."

Yep, agreed. That won't work either, since there is a cap on the amount that can be invested in any year, right? A plan old irrevocable trust is the best, I think.