Was your child a named beneficiary on the life insurance policy of a loved one? If so, you are now probably hearing from the life insurance company that you have to establish a “minor guardianship” or “minor conservatorship” before they can release the proceeds to you. Parents are often frustrated and surprised by this – since they assumed that because they are the parents of the minor, they should just get the money and be able to hold it and use it for their child and then hand it over to the child when he/she becomes an adult. Unfortunately, that isn’t how it works. Minnesota law requires that a minor conservatorship be established (life insurance companies will often, incorrectly, refer to it as a minor guardianship).
What is involved in establishing a minor conservatorship for life insurance proceeds or an inheritance in Minnesota? The proposed conservator (usually parents of the minor) must petition the court to be appointed. The petition sets forth the details of the situation. An attorney is sometimes appointed for the minor child. The court holds a hearing on the petition. A background study may be necessary for the proposed conservator. Depending on the situation, the court may restrict the funds, meaning the conservator cannot spend them absent a court order. Sometimes the courts allow the conservator to spend the funds for the care and well-being of the child while he/she is a minor. In all cases, there are annual reporting requirements by the conservator, so that the court can monitor the account. Each minor conservatorship situation is different and most people find it helpful to have an attorney assist them with the process.