{"id":43515,"date":"2023-08-02T10:39:20","date_gmt":"2023-08-02T14:39:20","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/my-ex-husband-died-and-left-a-100000-life-insurance-policy-to-our-teenage-children-how-should-i-help-them-invest-this-windfall\/"},"modified":"2023-08-02T10:39:22","modified_gmt":"2023-08-02T14:39:22","slug":"my-ex-husband-died-and-left-a-100000-life-insurance-policy-to-our-teenage-children-how-should-i-help-them-invest-this-windfall","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=43515","title":{"rendered":"My ex-husband died and left a $100,000 life-insurance policy to our teenage children. How should I help them invest this windfall?"},"content":{"rendered":"
\n

Dear Quentin,<\/strong><\/h2>\n

My ex-husband, and parent to my teenage children, recently passed away. He did not remarry, and his $100,000 life-insurance policy benefits our children.<\/p>\n

I would like to set this up to help them establish a nest egg, such as a down payment on a home in the future. I know it\u2019s their money, but I just want to ensure that I do my best for them, especially as I know I have limited control after they are of age.<\/p>\n

\n

Both of my kids are in their early teens, and should receive educational benefits from Veterans Affairs. I\u2019m still waiting on confirmation of that, as the VA is not known for timely processing. Any and all suggestions are appreciated.<\/p>\n

Mother and Ex-Wife<\/p>\n

Dear Mother and Ex-Wife,<\/strong><\/h2>\n

I\u2019m sorry to hear that your ex-husband passed away, especially for your children at such a young age. You don\u2019t mention any other assets \u2014 such as real estate \u2014 so I assume we are dealing with the $100,000 as the lion\u2019s share of their inheritance. Your instincts are admirable, but you won\u2019t be able to access this money on behalf of your children until they become adults.\u00a0<\/p>\n

Insurance companies don\u2019t pay out money directly to minor children. The payout of these funds will likely be delayed until there is a court-appointed custodian. Ideally, your husband would have named you as a custodian, and arranged to put the money in a trust in the event he died before they came of age.<\/p>\n

You can, in the meantime, make plans on paper to help them manage the money when they reach the age of 18 (in most U.S. states, but some state laws say they can only inherit at 21). That would include setting up 529 plans for their college educations when the time comes, and setting money aside for a down payment (or the germ of a downpayment).<\/p>\n

I recently wrote a story about how to invest $100,000, which gave some idea on the kind of equities to invest in \u2014 including companies with a higher return on equity, lower leverage, and more consistent earning profiles. Investing a small portion in the stock market will also help your children become aware of the miracle of compound interest \u2014 when you earn money on your initial investment and<\/em> money on your investment\u2019s return.\u00a0<\/p>\n

Becoming a custodian of your children\u2019s assets<\/strong><\/h2>\n

As for your ex-husband\u2019s insurance policy: \u201cThe simplest and most cost-effective option may be for the children\u2019s financial guardian to open a separate account for each child under the relevant Uniform Transfers to Minors Act (UTMA) or Uniform Gifts to Minors Act (UGMA) to hold the child\u2019s share of the life-insurance proceeds,\u201d says David Goldstein, a partner at Farrell Fritz, trust and estate law firm.<\/p>\n

You will most likely be required to get permission from your local probate court to serve as custodian of the children\u2019s assets until they reach legal age, says Al Kingan, estate and business planning lead at MassMutual. \u201cThe probate court will generally have some discretion regarding what obligations to impose on your custodianship,\u201d he says.\u00a0<\/p>\n

Not only are minor children not legally allowed to own significant financial assets themselves, you may be asked to provide an annual accounting to the court of your use of the children\u2019s funds, he adds. \u201cYou may even need to seek the court\u2019s permission regarding investment choices,\u201d Kingan says.<\/p>\n

When your children reach the legal age of maturity in your state, they could legally transfer their assets to you as trustee for you to maintain for the benefit of your children until a later date when they will have greater maturity, Kingan adds. \u201cYou can discuss with your personal lawyer whether this arrangement would be worthwhile based upon the size of the account,\u201d he says.<\/p>\n

You\u2019re starting with the right idea: investing and saving for your children\u2019s future. When minors inherit money, the lessons on what to do with it can be as important as the money itself.<\/p>\n

<\/p>\n
<\/p>\n<\/figure><\/div>\n

Readers write to me with all sorts of dilemmas.\u00a0<\/em><\/strong><\/p>\n

By emailing your questions, you agree to have them published anonymously on MarketWatch. By submitting your story to Dow Jones & Co., the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties<\/em><\/strong>.<\/p>\n

The Moneyist regrets he cannot reply to questions individually.<\/em><\/strong><\/p>\n

More from Quentin Fottrell:<\/strong><\/p>\n

\u2018Am I a bad husband?\u2019 My wife thinks she\u2019s Kim Kardashian. She buys clothes, cocktails and has $10,000 in credit-card debt.<\/p>\n

\u2018I can\u2019t sustain this pace\u2019: I\u2019m 61, single and have an MBA. I\u2019m draining my savings after losing my job. What\u2019s my next move?<\/p>\n

I mailed a $280 Le Creuset pot as a wedding gift and never received a thank-you note. I fear it never arrived. Is it gauche to ask?<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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