Sure, naming your child as a beneficiary of a life insurance or retirement account is a perfectly acceptable way of leaving your child money. However, if your child is under 18, your estate plan must provide a way for the money being left to the minor to be managed until he or she is old enough to mange it themselves. One way to accomplish this would be to set up a trust. When you set up a trust for your child, you appoint a trustee to manage and distribute the assets for your child. Once the child reaches the age specified by you in the trust, the trustee will distribute the assets to your child.
If you want to name your child as a beneficiary of your life insurance or retirement policy, what you would do is name the trust as the beneficiary of those accounts. By doing this, the money would belong to your child, but the trustee would manage the account until the child comes of age.
Creating the trust is very important if your children are under 18. If there is no trust and you name a minor child the beneficiary of a life insurance or retirement account, the court will have to appoint a guardian to manage those assets until the child becomes 18. For adult children, it is fine, however, to name them directly.
Another way to leave the proceeds of these accounts is through a trust set up in your will. If you use a will, however, the will must go through probate before the trust is funded. This has the same effect as using the trust alone, but just takes a little longer.
To discuss whether a trust is appropriate for you, contact the Law Offices of Albert Goodwin at 718-509-9774.