check payable to child or guardian?

[Guest PeterGulia]

For situations in which the qualified plan beneficiary is a minor child, the plan would like to make an administrative practice of making the payee name the actual child beneficiary's name. Will the guardian have any difficulty negotiating such a check? Would using the child's name be a good or poor practice?

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[Guest P A Weick]

A check indorsed by the guardian of a child's estate should pose no problem for negotiation as long as the guardian has the appropriate court appointment papers. Problems usually arise when the surviving parent or relative with whom the child is living wants to indorse the check and cannot because while a parent is the guardian of their child's person, in many states they do not have similar authority over the child's property. You need to check with an attorney in your jurisdiction to see if this is a problem.

Keep in mind too that as long as the child is old enough to write, many states will allow them to open a bank account as if they were of full legal age.

It is probably safest to write the check to the guardian if you have one named. In most states they will be bonded and have to account to court for any use of the money. I wonder if your plan would run any liability risk if it made the check payable to the child and the person living with the child misappropriated the proceeds. Possibly not and the bank which cashed the check would certainly be another potential defendant. Again, having a legally appointed guardian for large sums seems safest. For smaller sums, where you may be willing to run a small risk, your idea has merit.

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[Guest PeterGulia]

Thanks for the excellent help!

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