Buzz Kill Thought, but I need your opinion (long)

h2ojock13

So, even though we're towards the end of our 3rd tri's I've been thinking about this (because I'm paranoid) and despite looking online I can't find any reasonably financial options and I'm hoping someone else thought about this and has it handled.

MH and I both live in another state away from our families, we're in AZ family is in CA. MH's family is borderline train wreck, I have one sister who is financially successful and not a train wreck.

If something happens to myself and my husband (heaven forbid) my sister is best to take the baby (which she accepts). Already, my life insurance is set up with my husband as the primary and my sister as the secondary beneficiary so that she will have financial assistance to raise the baby. With MH I am primary and his daughter is the secondary. 

How does this work? His daughter has a mom and a step dad to take care of her (financially) if something happens to him, our child will have my sister (and my soon to be BIL)  but does having a baby justify me asking him to change his secondary beneficiary? Can we dictate how much goes to his daughter and how much should go to our son? Do I need to think about making a will (which they are expensive online) to cover all of this and make it known legally that the baby MUST go to my sister? I don't want anyone of his siblings trying to pull shenanigans and making something a legal mess in attempt to get some extra cash.

Has anyone thought of this? What are you doing? 

 

tokenhoser

I think I would want the spouse, then the children to be the beneficiaries, as then you don't have to redesgnate if things change. Your sister might be the best choice now, but finances and relationships can change over time. If the insurance goes with the child(ren) in trust, it will always end up where it belongs.

BrendaLou1969

You can buy will writing sofware, do it youself, then have it reviewed by an attorney - that should save you alot of money (that is what we are doing).   But you do need a will, period.  I see nothing wrong with asking your husband to change his life insurance second beneficiary to both children split equally which is only right since he will now have two children.

ianandleah

If you designate your child as a beneficiary on a life insurance policy, the money is distributed directly to the child regardless of whether the child is 18 or not. It isn't recommended to name minor children as beneficiaries (worst case scenario, what's a 1-year-old going to do with a $500k payout?) and can create problems for the guardian to access the money. The way most people provide for children with life insurance is to coordinate the life insurance policies with a simple estate plan. In a simple will, most people will name guardians for the children and create a testamentary trust to provide for the children (a testamentary trust is just a trust created within a will). The guardian can be the administrator of the trust, or you could choose someone else to manage the money if you want. Then, people name the testamentary trust for the children as the beneficiary on the life insurance policies.

h2ojock13

Thank You Ladies!!