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Angelo Popovsky was the beneficiary of a $150,000 life insurance policy at age 16 when his father died three years ago.  Because he was a minor, the life insurance company set up a fund until he turned 18.  Police allege that his step mother then deposited the funds into a joint checking account and proceeded to gamble more than $100,000 of the funds away.  While the law has caught up to the step-mother – she is facing theft charges in December this year – the fact remains the money intended for Angelo is mostly gone.  This sad result could have been avoided with a little planning. Insurance companies can’t pay insurance proceeds to minors.  The money has to be held by someone or something until the minor reaches adulthood.  Had the monies been paid out to a trust for Angelo’s benefit, he could have had a number of immediate benefits.

Money Immediately Available

The trustee would have received the funds promptly upon submission of the claim to the insurance company.  The trustee then would have the responsibility, and ability to immediately use the funds for Angelo’s benefit.

A Chosen Responsible Party

While wicked step-mothers sound like a Disney plot, it seems all too real for this young man.  How much better to have planned in advance who would be the responsible person to manage the trust funds, and implement some basic accountability, through regular accountings, and potentially through the use of a third-party trust protector.

Sensible Guidelines and Restrictions Past Age 18

This story is about the criminal acts of the step-mother.  However, if the young man had received this money at age 18 and gambled the entire amount away while no crime would have been committed it would have been just as wasteful.  A living trust can keep the trustee in place indefinitely, protecting the funds from creditors while providing funds for the things important to you, like education, housing, and perhaps providing the funds to start them off in business. There are more benefits that can be built into the structure of a living trust than just these three.  Combining life insurance with an estate plan can create a powerful legacy.