Smart Money: Ensure kids' share with prenup


DEAR BRUCE >> I currently have $2 million in several 401(k) plans from my past employments. Currently, my beneficiaries are my children (my wife is deceased).

I am thinking about getting remarried, but the second I get married, due to the law, my new wife would be the beneficiary unless she waives her right. She has agreed verbally to do that. However, under the slim chance she refuses afterward, what are my options to have the 401(k) money go to my children again?

— Reader

DEAR READER >> What is required here is a solid prenuptial agreement spelling out what you want, that your assets are to remain in your name and you have the right to decide who will get what and when. If your new wife is not agreeable to doing this, I wouldn't marry her unless you are prepared to transfer the 401(k) funds to your children before the marriage, and I am not at all comfortable with that idea.

DEAR BRUCE >> I worked for an insurance company for 37 years, and I also had a license to sell. I don't understand the thinking I've read in several articles saying that babies and children don't need life insurance. You read all the time of children being killed or dying of cancer and various diseases, and the families have no insurance to pay funeral or medical expenses. Then they set up a GoFundMe for people to donate money to pay expenses.

You can buy a large amount of whole life insurance on a baby or child at very little cost. The price will never increase and will build cash value. Also, if the child develops a medical condition at a later time, he is already covered. I don't like term insurance other than to cover a mortgage, etc.

My niece had a baby boy and my husband sold them a $50,000 policy with the parents as owners. Several months later, the boy had a stroke, which left him with learning difficulties. He graduated high school through special classes, but has never been able to work. He's in his 30s, and he could never get insurance now.

— J.J.

DEAR J.J. >> I agree with you that there are times when a life insurance policy on a child is valuable, but I must also continue to state that the chances of that happening are remote.

It's true you can buy a large amount of whole life insurance at a modest price for babies and young children. However, in my opinion, life insurance is generally something that can be passed on until later in life.

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