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Estate Planning and Children: What Parents/Guardians Can Do

A father helps his son tie his shoe and considers estate planning and children.

Estate planning and children go hand-in-hand. The birth of their first child is often the event that causes someone to call estate planning advisors for the first time. It’s a weight off your shoulders to know that your young children have some financial and legal protections in place if you die or are incapacitated. 

Guardianship and Money Management for Minors

For parents of minor children, estate planning documents should  answer a few core questions. 

  • Who should take care of the kids? Use your will to name the person/couple you would want to have legal and physical custody of your kids, as well as an alternate person or couple. While the courts ultimately decide who will take custody of minor children if their parents are gone, guardianship designations in the parents’ wills carry a lot of weight. 
  • Where will the money come from for kids’ care? Parents can work with estate planning advisors to make sure that kids are financially protected in a few different ways. Buying life insurance policies and funding

    education savings plans 

    like 529 plans are two ways for parents to take care of some big financial needs that kids might have in the future. Using trusts to hold and transfer assets to kids is also a standard part of estate planning for minor children.
  • Who’s in charge of the money? The same person who gets guardianship of the kids shouldn’t necessarily be named as trustee. Parents can (and often should) have different people in charge of caring for the children and managing the money that provides for their care.

Estate Planning for Children with Disabilities

For parents, grandparents and guardians of children with disabilities, estate planning takes on extra importance. Here are just some of the considerations that might be part of the conversations parents and guardians have when discussing estate planning and children with their advisors. 

A child with a disability might need ongoing financial and physical support throughout their lives. Parents or other guardians who currently provide that support must use estate planning to ensure that resources are in place to meet their child’s future needs. It’s an ongoing process. Plans should be adjusted as the child grows and their needs evolve.

A few things to keep in mind around estate planning and children with disabilities:

  • Be careful not to transfer assets to children in a way that risks their ability to get government benefits. If they have legal control over money or other assets, they may not meet income qualifications for some of the services they need in the future. 
  • Parents/guardians of children with disabilities may have more substantial insurance needs than their peers. A parent who is the primary caretaker for a child with a severe disability must think about insurance to pay for skilled caretakers or long-term care when the parent is no longer able to do it. 
  • Think about what kind of resources and support the child with a disability would need, in addition to money, if their primary parent or guardian were suddenly incapacitated. Create a letter of intent or other documentation with information that caretakers/advocates/guardians should know about the child and best practices for their care, in case you can’t convey that information in person.

Using Estate Planning to Transfer Assets to Children/Younger Generations

There are many estate planning strategies that you may use to transfer assets to children, grandchildren and other younger relatives. Many people simply leave things to their loved ones in their will, though this strategy requires the estate to complete probate before heirs can access their inherited assets. Naming kids as the beneficiaries on life insurance or retirement accounts allows them to inherit assets without going through probate. 

Paying for their tuition is another generous way to support younger relatives, and payments made directly to the institution aren’t subject to gift taxes. And many families use one or more kinds of trust as a way to pass assets to the next generation without incurring estate taxes. 

Make sure to share not just your money but your money management wisdom too. Help the next generation develop the financial skills they need to manage inherited money and stretch it into the next generations. Talk through hypothetical money decisions and the consequences of various choices. Teach them about basic investing concepts. You can even bring them to meetings with your financial and estate planning advisors. Encourage them to ask questions about anything that’s confusing. 

Need Help Navigating Estate Planning and Children? 

Have more questions about estate planning? Take a look at our recent ebook, “Estate Planning for Every Stage of Life,” for more.  Sachetta, LLC’s advisors don’t believe in cookie-cutter estate planning strategies. Every family is unique, and every child within a family has their own unique needs. Our estate planning advisors help parents, grandparents, guardians and other adults to create estate plans that protect the children they love. Contact us today.


Steve A

Stephen P. Ahern, CPA/PFS, CFP®, AEP®, MST provides individual financial, investment, estate and tax planning and small business consulting to a diverse base of clients including key top-level executives, high-net-worth individuals, business owners, venture capitalists, and entrepreneurs. Stephen co-founded and served as President of Wealth Management Advisors, LLC for twenty-one years before joining the Sachetta team.