Tom and Rachel had two young kids and a large life insurance portfolio — over $1.5 million in coverage.
Tom said, “If something happened to me, the life insurance should take care of everything.”
But they had no will, no trust, and no planning for guardianship or minor children.
I explained:
- Minor children cannot receive life insurance outright
- If both parents died, the state would appoint a guardian — not them
- Insurance paid to the estate triggers probate
- Court-appointed conservators may control the funds
- Funds can be mishandled, misused, or lost
Rachel’s eyes filled with tears.
“We had no idea.”
THE PLAN
We fixed everything:
- A Revocable Living Trust that became the beneficiary of all life insurance
- Detailed instructions for:
- Guardian for the children
- Trustee to manage the funds
- How money should be used
- Age-based distribution
- Pour-over wills naming guardians
- TOD/POD on all accounts
- Healthcare directives and durable POAs
THE OUTCOME
Now:
- Life insurance pays directly to the trust tax-free and probate-free
- Kids are protected
- Trusted adults manage the funds
- No court involvement
- No delays
Tom said,
“We thought the life insurance was the safety plan — but you gave us the real safety plan.”