Blessing Her Life, Not Cursing It

Gina's 11-year-old daughter's father recently died. There's no will, but there is a $500,000 life insurance policy with Gina's daughter as the beneficiary. What's the best way to invest the money for her future?

QUESTION: Gina in Cincinnati has an 11-year-old daughter whose father recently died. There’s no will, but there is a $500,000 life insurance policy with Gina’s daughter as the beneficiary. What’s the best way to invest the money for her future?

ANSWER: That is outside the will. That check just comes directly to her. You need to think about what the money is for when you save for her future. She’s 11, so are we going to use it for college? Are we going to use it to buy a house?

The account simply goes into her name. You are the custodian of the account, meaning you are in charge of the account. If it were my child, I would invest it in good growth-stock mutual funds.

Obviously this is her money, and you’re managing it for her good. Her good might include a car at 16. It certainly will mean paying cash for college. It might even include paying cash for a home later on. When she’s 18, this money will be hers. You have seven years to train her to not be an idiot.

If it was your money, you could put it into trust for her. But it’s his money he left to her, so it’s her money. I don’t think you can arrange it any other way but for her to get it all at once. Sit down with one of our Endorsed Local Providers who is an investment broker who can help you pick out some investments.

Then what you do is, age appropriately, you start to explain to her that there is money there. Then you start to say there’s a lot of money there. Then you start to explain that the money is a blessing, it is not a curse. It is yours to manage for the good of her life and others. It is a responsibility. It is not for you to buy Nintendo.

My family and I are wealthy because of the stuff we teach. So I’ve had to teach my grown kids, the whole time they were growing up, that they are going to be wealthy when I die, and that is primarily a responsibility more than it is a blessing. Drill that into her head.