What If the Beneficiary Is a Minor or Incapacitated in Florida?

Life insurance is meant to provide financial protection to loved ones after a death. But what happens if the person named as the beneficiary is a minor child or someone who is legally incapacitated?

In Florida, insurance companies generally cannot simply issue a check directly to a minor or an incapacitated person. Instead, special legal procedures are often required to ensure the funds are properly managed and protected.

Understanding how these situations are handled can help families avoid delays, legal disputes, and unnecessary court involvement.

Why Insurers Cannot Pay a Minor or Incapacitated Beneficiary Directly

Under Florida law, a minor (someone under age 18) generally cannot legally manage large sums of money or enter into binding financial agreements. Similarly, an incapacitated adult may lack the legal capacity to handle funds responsibly.

Because of this:

• Insurance companies typically will not issue payment directly to the minor.

• They may require a legal guardian or court-appointed representative to receive and manage the funds.

• If no such arrangement exists, a guardianship proceeding may be required.

This process is intended to protect the beneficiary, but it can also create delays and additional expenses.

Common Ways Benefits Are Handled for a Minor Beneficiary

1. Court-Appointed Guardian of the Property

If a minor is named directly as the beneficiary, the most common outcome is:

• A parent or another responsible adult petitions the court.

• The court appoints a guardian of the minor’s property.

• The life insurance proceeds are paid into a restricted guardianship account.

The guardian must:

• Follow strict court supervision.

• Obtain court approval for certain expenditures.

• Provide annual accountings.

This process can be time-consuming and expensive.

2. Use of the Florida Uniform Transfers to Minors Act (UTMA)

In some cases, the life insurance policy may name a custodian for the minor under the Florida Uniform Transfers to Minors Act (UTMA).

For example, the beneficiary designation might read:

“John Smith, as custodian for Jane Smith under the Florida UTMA.”

In this situation:

• The insurance company can pay the custodian directly.

• The custodian manages the funds for the minor’s benefit.

• The funds are transferred to the child when they reach the age specified by law (often 21).

This approach is usually simpler and less expensive than a full guardianship.

3. Trusts for Minor Beneficiaries

Many families use a trust to manage life insurance proceeds for a child.

If the policy names a trust as the beneficiary:

• The insurance company pays the trustee.

• The trustee manages and distributes the funds according to the trust terms.

• There is typically no need for court guardianship proceedings.

Trusts can:

• Control how and when funds are distributed.

• Protect assets from misuse.

• Provide for education, medical care, and other needs.

What If the Beneficiary Is an Incapacitated Adult?

If the beneficiary is an adult who is legally incapacitated:

• The insurer may require payment to a court-appointed guardian.

• If no guardian exists, a guardianship proceeding may be necessary.

• If the beneficiary has a trust or durable power of attorney, the funds may be handled through those arrangements, depending on the circumstances.

Each situation depends on the beneficiary’s legal status and the policy terms.

Potential Problems That Can Arise

When a minor or incapacitated person is the beneficiary, several issues can delay or complicate the claim:

• Disputes over who should serve as guardian or custodian.

• Lack of a trust or custodian designation.

• Insurance company refusal to pay without court approval.

• Family conflicts over control of the funds.

In some cases, insurers may hold the funds for months while waiting for the proper legal documentation.

How to Avoid Problems in the Future

If you are purchasing or reviewing a life insurance policy, consider these steps:

• Avoid naming a minor directly as beneficiary.

• Use a trust to manage funds for children.

• Name a UTMA custodian when appropriate.

• Review beneficiary designations after major life events.

Proper planning can save your family time, money, and stress later.

What to Do If You’re Facing This Situation Now

If you discover that a minor or incapacitated person is the named beneficiary:

1. Notify the insurance company and start the claim.

2. Ask what documentation they require.

3. Determine whether a guardianship, trust, or UTMA arrangement applies.

4. Consult a life insurance claims attorney if delays or disputes arise.

An experienced attorney can help:

• Navigate guardianship or trust issues.

• Resolve disputes between family members.

• Challenge wrongful claim denials or delays.

Speak With a Florida Life Insurance Claims Attorney

If a life insurance company is delaying payment because the beneficiary is a minor or incapacitated, you may need legal guidance to move the process forward.

An experienced Florida life insurance attorney can review the policy, explain your options, and help ensure the funds are properly protected and distributed.

Contact our office today for a confidential consultation about your life insurance claim.

Have you or someone you know been denied a life insurance claim? Contact Florida Life Insurance Claims Lawyer J.P. Gonzalez-Sirgo by dialing his direct number at (786) 272-5841, calling the main office at (305) 461-1095, or Toll Free at 1 (866) 71-CLAIM or email Miami Attorney Gonzalez-Sirgo directly at jp@yourattorneys.com or by text at (305) 929-8935.

This article is for informational purposes only and does not constitute legal advice.