Questions about beneficiaries

[arosado1970]

What is the name of your state? NC

Can a person who has life insurance have a notarized written contract w/ the beneficiary on how the money is to be used? IE for funeral, some monies to his children etc.
He doesn't trust his beneficiary to use the money "wisely". He would like to have terms set. He already knows that he should change the beneficiaries to include his children. But even his children would not use it the way he would like it to be used. Bad family situation. How hard would it be the charge the beneficiary?
Thanks in advance and any advice would be greatly appreciated.

 

[Dandy Don]

This is a very poor way to do estate planning. The beneficiary does not have to abide by such an agreement and can spend the money any way he/she wants to.

Person would be better off naming no beneficiary so that the money would be paid to his estate and then the executor could use it however the person specifies in the will that the money should be spent, or the person should specifically inform the insurance agent that the estate is to be paid and not a particular beneficiary so that the insurance company will know this.

Person could also instruct executor to set up the monies in a trust account at a local bank to disperse it to the children so much per month, but there is no way he can have complete control on what the children do with the money. He should also consider buying a burial insurance policy so that the funeral expenses can be paid for separately without taking money away from the estate.

DANDY DON IN OKLAHOMA ([email protected])

 

[sturgbe]

A Family Incentive Trust (FIT) is the way to go. Although you may have a FIT foe any amount, I would not recommend one unless you have a sizeable estate due to the fees associated in setting them up. There can be wording in the trust that states who, what, where, when and how.
For example, you can have monies payable to someone only after the graduate from college.

A spendthrift clause is also something that you may want to consider. If your beneficairies have credit trouble and have their assets attached by creditors, a spendthrift clause may be able to keep creditors away from your future gifts.

 

[arosado1970]

Thank You

Thank you both for your advice. It has been most helpful and I will definately pass along the information to my friend.