When you consider the best way to allocate your assets through your Illinois estate plan, your primary focus may be how to ensure that your minor children are cared for financially. We at the law office of Donald R. Johannes, Attorney at Law, understand that a will may not be enough, and we often advise clients on the benefits of a life insurance trust.
NerdWallet.com explains that you may not want to name your young children or their guardian as the beneficiaries of your life insurance policy. If you do, the guardian would probably be the one controlling the funds until they turn 18, and then the balance would be distributed among them. You could let them know that you hope they will be responsible with the money. However, once they receive their inheritance, you would not have any control over how they spend it, even though they may not have the skills to manage such a large sum yet.
If you name a trust as the beneficiary of the policy and choose a trustee to manage it, you regain control over your children’s financial future. You can designate a certain amount to be used for education, for example. Also, you could ensure that they do not receive their portion of the balance until the time when you believe they will be ready, whether that is 18, 25 or another age. The guardian may not be the person you want to name as trustee. You have the option to name a financial entity or professional or another person who has earned your confidence to manage the funds for your children. More information about life insurance trusts is available on our webpage.