Investments of a Minor's Trust

[egavel]

Im just looking for a general answer here, to see if it is worthwhile pursuing. Im helping a friend, who will of course hire an attorney if the approach is viable.

Here is the situation:

State of California
Life insurance proceeds from a military group insurance policy must be placed in trust for a minor beneficiary (I believe by a court order).
The minor is a US citizen, her mother is permanent resident alien.

The mother would like a portion of the minors trust to be invested in a condominium or apartment, and have the Trust lease the apartment to her, hopefully at less than market rental rates, since she has very little income of her own currently.

Is this viable? What about at market rental rates, more of an arms length transaction?


BTW, her original question was whether she (the mother) could buy the apartment using the minor's assets as collateral for the loan, which I immediately assumed would not work?

 

[seniorjudge]

Without reading the trust, no one can answer.

But I will tell you that I suspect that the trust must make very conservative investments and what you have outlined sounds pretty speculative.

 

[egavel]

thanks seniorjudge, but...

Without reading the trust, no one can answer.

But I will tell you that I suspect that the trust must make very conservative investments and what you have outlined sounds pretty speculative.

...I dont believe a trust exists yet. Though I probably dont know the details well enough to get a more definitive answer.

As I understand the situation, the parents were separated at the time of his death in Iraq. The daughter was sole beneficiary of his life insurance, the mother received the death gratutity. Because the daughter was a minor beneficiary, the insurance company required a court order for disposition of the policy, and the court ordered (hows this for conservatism) that 4 bank accounts be opened so the deposit in any one bank did not exceed FDIC limits. The accounts are to be opened in the childs name with the mother as "guardian", at least thats the term the mother used.

The trust approach was my laymans idea for how she might be able to ensure a proper home for the daughter as well as an appropriate investment, with the mother paying the amount of any mortgage payments to the Trust as rent.


Obviously