Fort Belvoir Will Questionnaire Page 10
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10CHILDREN AS SGLI BENEFICIARY DESIGNATIONS
The SGLI policy is the largest single estate asset for many members of our military
community, and careful management of this resource is vital to effective estate planning.
Servicemembers designate SGLI beneficiaries on the SGLV form 8286 which can be
completed online, printed locally, and turned into the S-1 office. Note that beneficiary
designations are not effective until they are accepted by the unit. Naming persons over
the age of 18 as beneficiaries is a routine matter that causes the policy proceeds to be paid
to the beneficiaries immediately following the death of the insured. If no beneficiary is
named, proceeds will pay out to the following beneficiaries in the order listed: a) spouse;
b) children; c) parents; d) executor of estate, or e) next of kin.
However, Soldiers frequently desire to leave proceeds to minor children (often times as
alternate beneficiaries or as primary beneficiaries in blended families). Usually, naming
a minor as a direct beneficiary to a life insurance policy is not the best way forward.
Those who wish to leave SGLI assets to minors can do in several different ways. (Note
that each option carries different results that should be thoroughly considered by the
Soldier with JAG before any decision is made.)
1) Testamentary Trusts. To fund a testamentary trust with SGLI proceeds, the SGLV
8286 should be completed to read; "To the trustee of the testamentary trust created in
Article ____ of my last will and testament, for the benefit of (name of minor). If no trust,
then to (name of child(ren) directly." Note that in such cases, payments can be made only
through the probate process, which can take time.
2) Uniform Transfers to Minors Act (UTMA) accounts. When used, SGLI will
immediately pay insurance proceeds to UTMA custodians. Each state has adopted a
version of the UTMA, which creates statutory trusts for funds transferred to minors.
Custodians of UTMA accounts may use the property to for the benefit of the minors, and
are required to exercise the standard of care that would be observed by a prudent person
dealing with person's own property, but are not subject to any other fiduciary
responsibilities. UTMA funds are transferred to the minor upon the child's 18th birthday,
unless the number (21) is reflected in the designating language (as in the following
sample). To make SGLI transfers under the UTMA, the SGLV 8286 should be completed
as follows: "To (name of custodian) as custodian for (name of minor) under the (name of
state) Uniform Transfers to Minors Act (21)."
3) Minor child named as direct beneficiary. SGLI pays to child's court-appointed
guardian of the child’s property or conservator of the child’s estate, as required by the
laws of the state in which the child resides. Note that a parent with sole legal or physical
custody (following a divorce decree) is normally not sufficient for SGLI to pay out. Most
states require that a court designate a guardian of the child’s property or conservator of
the child’s estate to receive insurance payments. This can take time, and resources of the
family, and can result in delayed payments, and premature payment of proceeds to the
child.
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