Please can someone with legal/financial knowledge clear this up for me..
I have taken out a life insurance policy which would pay out a large lump sum intended to help raise my dd (currently 5) if I die before she turns 21 (her dads not in the picture.) I have for a long time agreed with my sister that in the event of my death she would look after my dd and this is already specified in my will which I made this year.
I have been sent discretionary trust forms by my life insurance provider since when I explained the situation, they pointed out my dd would not be able to be the sole beneficiary as she would be too young to manage he money herself since it’s intended to be paid out while she is a minor. Therefore they have listed my sister (dd’s potential carer) as Trustee, and also as a Named Beneficiary (i.e. if I died, my sister would receive the monies which are required to pay for my dd’s upkeep.) I can also enter my dd as a Potential Beneficiary.
The idea is that the money should cover her costs, help towards university (all before age 21 when the policy expires) but also my sister could distribute any remaining lump sum to my dd when she is of age to need it herself.
Therefore is it correct that my sister would be the Named Beneficiary as well as a Trustee and my dd would be a Potential Beneficiary or should my dd not be on the form at all?
Initially I thought my sister would only be a Trustee but since she would be receiving money and administering it for dd, presumably this isn’t the case. I just don’t know if I should put my dd as a Potential or even Named Beneficiary to ensure she is getting the benefit of it. However the fact that I have specified that the money is for her upbringing in my will, may be enough for this?
Any help would be much appreciated Thankyou