Minors can’t legally own a life insurance policy or take possession of a death benefit. If a child is named directly, a court may have to appoint a guardian, adding delay and expense. For many families, a Uniform Transfers to Minors Act (UTMA) designation is the simplest solution.
Key takeaways
- Minors can’t legally receive life insurance proceeds, so a child should never be named outright.
- A UTMA designation names a custodian to manage proceeds for the child and works like a simple trust.
- At the age of majority the child receives everything outright, so a formal trust may be better for larger amounts.
The beneficiary designation is the most important part of a life insurance policy, yet the application gives it the least space.
How a UTMA designation works
A UTMA designation is created in the beneficiary designation itself. It works like a “poor person’s trust” when a formal trust is too costly or complicated. A custodian is appointed to manage the policy proceeds for the child according to the directives in the state’s UTMA.
Details to get right
- Name a successor custodian. The custodian may die before the child reaches adulthood.
- Follow state law. The wording must comply with the governing state’s UTMA, and the age of majority differs by state.
- Check with the carrier. Confirm the wording with the carrier’s claims department.
- One designation per child. Each minor beneficiary needs a full, separate designation.
- Plan for contingent minors. Contingent beneficiaries who are minors need the same care.
A UTMA designation almost always needs a separate page attached to the application.
The main limitation: control ends at majority
When the child reaches the age of majority, the custodian must turn over the proceeds outright. Unlike a trust, a UTMA can’t delay control well into adulthood. For larger amounts, or when parents want distributions staged over time, a formal trust is usually better. See our guide to trust types for options.
Make beneficiary reviews part of your service
Births, deaths, divorces and remarriages all change who should be named and how. Reviewing designations regularly, especially when children are involved, protects the family and builds trust with your clients. Contact us with questions or for help with a case involving minors.
Frequently asked questions
Can I name my minor child as life insurance beneficiary?
You can, but a minor can’t legally receive the proceeds. A court may need to appoint a guardian. A UTMA custodian designation or a trust avoids that.
What happens when the child reaches adulthood under UTMA?
The custodian must turn the remaining proceeds over to the child outright at the age of majority set by state law.
Is a UTMA or a trust better for a minor beneficiary?
UTMA is simple and inexpensive. A trust costs more but allows the parents to control how and when money is distributed, which is often better for larger amounts.
Reviewed by Tim Fuller on 2026-09-26
Tim Fuller
President, SRS Inc.
Tim leads SRS Inc., a full-service IMO (Independent Marketing Organization) and BGA (Brokerage General Agency), connecting independent financial professionals with life, annuity, disability income, and long-term care solutions from 60+ carrier partners.
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