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Woman Explains the Worst Financial Decisions a Parent Could Ever Make

And what to do instead of them

Parents want what's best for their kids, but sometimes, they have it all wrong. Example number one is life insurance. Of course, you want to take all precautionary measures to make sure your kids are taken care of if something happens to you. But some of these measures can cause more harm than good.

Financial coach and ex-Wall Street employee @yourrichbff (Vivian) posted a TikTok explaining a common mistake parents make when it comes to life insurance. If you have kids or are planning to have kids, this could save you some trouble and give you some peace of mind.

Vivian said the worst financial mistake parents can make is naming their minor kids as beneficiaries on their life insurance policy. By law, minor children cannot receive the proceeds of a life insurance policy, and those proceeds would instead go to a guardian either appointed by the parents or the state. That guardian would have full control of the money.

This doesn't mean your kids have no choice but to fend for themselves. Instead of naming them on your life insurance policy, you can open a Uniform Transfers to Minors Act (UTMA) account for your kids. You can then appoint a trusted guardian of your choosing and then name the UTMA account as the beneficiary of the life insurance policy. 

This will ensure that your kids are well taken care of after you're gone and will keep the government out of your business.