The cost of raising a child can be daunting when considered as a lump sum. According to Nerd Wallet, some financial experts estimate that parents in Minnesota may spend more than $250,000 per child on basic necessities. After food, clothing, a home, transportation, health insurance and medical care have been covered, parents may spend another $500,000 on vacations, extracurricular activities, Christmas presents, birthday parties and college.

Of course, parents want to ensure that if something happens to them, their children will not suffer financially. However, most do not have such a large lump sum to place in a trust or savings in the event of their untimely death.

Fortunately, a life insurance trust may allow parents who do not have many assets to leave behind a secure financial future for their children.

Nerd Wallet explains that simply purchasing a life insurance policy may not be a good idea. The child may be the beneficiary, but the guardian will be in charge of administering the funds as he or she sees fit.

Instead, parents may set up a trust and name a trustee. Then they fund the trust with the money to purchase the life insurance policy. The trustee pays the premiums in the name of the trust. If a parent dies, the trust as the beneficiary receives the proceeds.

In the instructions to the trustee, the parents can state exactly how they want the money in the trust to be distributed to the child. Perhaps this involves providing a monthly sum to the guardian for the child’s needs, money set aside for college, and a lump sum to be given to the child at graduation. The point is, the parents are in control, and can make sure that their child is provided for in the way that they choose.