One of the things that I love about my job is helping people with real-world, actual, legal issues. And one that comes up often is parents, or grandparents, asking me how to name their young children, or grandchildren, as beneficiaries for their retirement accounts, life insurance, or payable on death accounts.
Here’s the short answer: Don’t. At least don’t name your minor child/grandchild directly. If you name a minor child directly as the beneficiary for an asset that’s worth more than $5,000, that child will not be able to inherit it without some form of adult supervision because minors are not allowed to own property in their own name that exceeds that limit.
Instead, unless you name an adult as custodian or a trust to manage that property, you will have to get court approval to release those assets to the child. Unless the total amount of the property is $20,000 or less, a Property Guardian will have to be appointed by the court. This Property Guardian will be responsible for managing those assets for the child until that child becomes a legal adult. If the total falls below that $20,000 limit, the court has discretion to order you to hold the money in the way most beneficial for that child.