When you buy life insurance, you should think hard before designating a beneficiary. Possible choices include:
* Your spouse. You’ll probably want to provide financial security for your surviving spouse but your spouse might remarry someone who already has children or become a parent again. Either way, money you thought would provide for your surviving spouse and your children will be used, at least in part, to support someone else’s children.
* Your children. If your spouse will have sufficient personal assets, you can name your own children as beneficiaries of your life insurance. This will ensure that the money will come to them. However, if the beneficiaries are minors, the money will have to go into a custodial account and the money in custodial accounts will be theirs, with no strings attached, after the children become adults, at age 18 in many states.
* A trust. Just as a trust can own an insurance policy, so can a trust be named the beneficiary of a policy on your life. Money held in a carefully-structured trust won’t be squandered or spent on people you don’t know. Yet a responsible trustee can provide funds to your survivors, as needed.