The Situation
Alan and Betty are both 42 years old and have two children:
- Carl (16)
- Don (10)
Carl and Don are healthy, well-adjusted kids. That said, Alan and Betty have started to notice some age-appropriate, but concerning, financial habits.
Carl spends his allowance as soon as he receives it and shows little interest in working a part-time job. While not unusual for a teenager, it raises questions about how he would handle money if he suddenly had access to a significant inheritance.
Don is still too young to fully grasp the value of money at all.
Beyond finances, Alan and Betty share a much more serious concern: who would raise Carl and Don if something happened to both of them.
They strongly believe Betty’s sister, Erin, would be the best person to step into that role. Erin lives nearby and has a close relationship with the boys. Alan and Betty’s parents, on the other hand, live out of state.
Alan and Betty are financially successful, with a combined estate worth over $3,000,000.
A Well-Intentioned but Incomplete Plan
Recognizing the need for planning, Alan and Betty take a few steps:
- They name Carl and Don as 50/50 beneficiaries on all financial accounts.
- They execute Durable Powers of Attorney naming Erin to make financial and healthcare decisions if they become incapacitated.
- They explain their wishes to Erin, provide a list of assets, and reassure her that “everything is taken care of.”
Tragically, Alan and Betty pass away shortly after putting this plan in place.
The First Shock: Powers of Attorney End at Death
After Alan and Betty’s death, Erin takes Carl and Don into her home and begins notifying financial institutions.
She presents the death certificates and Durable Powers of Attorney to the bank, expecting to access funds to support the children.
Instead, she’s told something surprising and devastating:
Durable Powers of Attorney are no longer valid upon death.
Because:
- The accounts were in Alan and Betty’s names, and
- Carl and Don are minor beneficiaries,
the bank cannot release funds without a court-appointed conservator for each child.
Alan and Betty believed they had created a simple and efficient plan. In reality, Erin has no legal authority to access money needed for food, housing, clothing, or school expenses.
The Guardianship and Conservatorship Problem
Erin consults an attorney, who confirms several harsh realities:
- A conservatorship is required to manage assets belonging to minor children.
- A guardianship is required to make legal decisions for the children.
- Powers of Attorney provide no authority after death.
- Alan and Betty did not have a last will and testament.
This last point creates a major issue.
In most states, a will is where parents:
- Nominate a guardian for their minor children, and
- Nominate a conservator to manage the children’s inheritance.
Because Alan and Betty did not name anyone, Erin must petition the court to be appointed.
Family Conflict and Court Involvement
Under state law, all interested parties must receive notice of a guardianship or conservatorship proceeding.
That means:
- Alan and Betty’s parents
- Other siblings
- Potentially other relatives
Erin does not get along with her parents, who live out of state. They strongly oppose Erin and intend to fight to be appointed guardian and conservator themselves.
What was already a difficult legal process now becomes:
- Emotionally charged
- Time-consuming
- Expensive
Even if everyone eventually agrees, conservatorships:
- Are costly to establish
- Require ongoing court oversight
- Remain open until the child turns 18
If Erin’s parents prevail, Carl and Don could be forced to move out of state, completely upending their lives, an outcome Alan and Betty never would have wanted.
The Bigger Financial Risk: Inheriting at 18
There is another major issue hiding beneath the surface.
Under state law:
- When Carl turns 18, the conservatorship ends.
- All remaining assets must be distributed outright to him.
That means Carl could receive over $1,500,000 at age 18.
Given Carl’s current spending habits, imagine the risk:
- No financial maturity
- No oversight
- No protection
Studies consistently show that large inheritances received at a young age are often squandered within five years, frequently causing long-term harm rather than benefit.
A Better Plan: Wills and a Revocable Trust
Had Alan and Betty implemented a comprehensive estate plan, nearly all of these problems could have been avoided.
Step One: A Properly Drafted Will
A valid last will and testament would have:
- Nominated Erin as guardian of Carl and Don
- Nominated Erin (or another trusted person) as conservator
- Greatly reduced court involvement and family conflict
However, a will alone does not solve the inheritance-at-18 problem.
Step Two: A Revocable Living Trust
A Revocable Trust provides far greater control and protection.
Under this structure:
- Alan and Betty transfer assets into the trust.
- Erin is named as Successor Trustee.
- The trust holds and manages assets for Carl and Don.
- The trust can give Erin discretion to use funds for the children’s:
- Health
- Education
- Maintenance
- Support (HEMS)
This allows the children to fully benefit from the assets, without unrestricted access.
Examples:
- College tuition? Covered.
- Housing and medical expenses? Covered.
- A reliable car for work or school? Approved.
- A brand-new sports car at 18? Erin can say no.
Thoughtful Distribution Over Time
Rather than giving Carl and Don everything at 18, the trust can distribute assets gradually, for example:
- Trustee discretion for HEMS from birth to age 35
- ⅓ distribution at 25
- ½ distribution at 30
- Full distribution and control at 35
This approach:
- Encourages maturity
- Protects against impulsive decisions
- Still allows meaningful access to resources at key life stages
By age 35, beneficiaries typically have the experience and judgment to manage wealth responsibly.
The Takeaway
For parents of minor children, good intentions are not enough.
Without proper planning:
- Courts decide who raises your children
- Family conflict can override your wishes
- Minor children require expensive conservatorships
- Young adults may receive life-changing sums far too early
With a comprehensive estate plan:
- Guardians are clearly designated
- Assets are protected and thoughtfully managed
- Court involvement is minimized
- Children are supported, not harmed, by their inheritance
Contact Us
Planning for minor children is one of the most important, and most misunderstood, parts of estate planning.
A coordinated plan using wills, trusts, and powers of attorney ensures that:
- Your children are raised by the right people
- Your assets are used wisely
- Your legacy strengthens their future rather than jeopardizing it
If you have minor children, now is the time to ensure your plan truly protects them no matter what happens.