Becoming a parent changes everything. You suddenly have someone who depends on you for everything, from daily care to their entire future. Most new parents focus on immediate needs like feeding schedules and sleep training. But there’s something equally important that often gets pushed to the bottom of the to-do list: estate planning.
You might think estate planning is something only wealthy people or retirees need to worry about. That’s one of the biggest mistakes young parents make. The truth is, if you have children under 18, you need a plan in place right now. Without one, you’re leaving critical decisions about your children’s care and inheritance in the hands of the court system.
Why Young Parents Can’t Afford to Wait
When you don’t have an estate plan, the state makes decisions for you. This means a judge who has never met your family will decide who raises your children if something happens to you. They’ll also control how your assets get distributed, which might be completely different from what you would have wanted.
These court proceedings take time and cost money. While everything gets sorted out, your children and other family members are left in limbo. The emotional stress alone can be overwhelming, but the financial burden makes everything worse.
Starting your estate plan while your kids are young gives you time to make changes as your family grows. Your needs when you have a newborn are different from when that child starts school or becomes a teenager. Having a plan in place means you can adjust it along the way instead of starting from scratch during a crisis.
What Happens Without a Plan
Let’s be clear about the risks. If you die without a will in Idaho, state law determines who gets your property and who takes care of your kids. You might assume everything automatically goes to your spouse, but that’s not always true, especially if you have children from a previous relationship.
The guardianship issue is even more serious. Without clear instructions from you, family members might disagree about who should raise your children. This can lead to lengthy legal battles that tear families apart. Your kids could end up with someone you never would have chosen, simply because you didn’t put your wishes in writing.
Money is another huge concern. Any inheritance your children receive could be held by a court-appointed guardian until they turn 18. Then, on their 18th birthday, they get everything at once. Most teenagers aren’t ready to handle a large sum of money responsibly, no matter how mature they seem.
Building Your Will: The Foundation
Every estate plan starts with a will. This document does two main things for parents. First, it names a guardian for your minor children. Second, it explains how you want your property divided after you die.
Choosing a guardian is one of the hardest decisions you’ll make. You want someone who shares your values and parenting style. They should be financially stable and young enough to care for your children until adulthood. Many parents choose a family member, but a close friend can be just as good if they’re the right fit.
Don’t just pick someone and hope they’ll say yes. Talk to them first. Make sure they understand what you’re asking and are willing to take on that responsibility. You should also name backup guardians in case your first choice can’t serve when the time comes.
Your will also needs to clearly state who gets what property. This includes your house, cars, bank accounts, and personal belongings. Be specific to avoid confusion and potential family disputes later.
Why Trust Funds Make Sense for Most Families
Here’s something many parents don’t realize: you don’t need to be rich to set up a trust for your kids. Trusts are actually one of the smartest ways to pass money and property to young children, regardless of how much you have.
A trust puts someone you choose in charge of managing assets for your children’s benefit. This trustee controls when and how the money gets used until your kids reach an age you decide is appropriate. Unlike leaving everything directly to a child, a trust gives you control from beyond the grave.
Types of Trusts for Young Families
Testamentary trusts are created through your will. They don’t exist until you die, and only if they’re needed. For example, if you’re still alive when your child turns 25, the trust never gets created because it’s not necessary. But if you die while your child is young, the trust activates automatically and holds their inheritance until they’re older.
Standalone trusts are set up while you’re still alive. You can fund them immediately or use your will to transfer assets into them after you die. These trusts work the same way as testamentary trusts when it comes to managing your children’s inheritance.
Both types let you decide at what age your children receive their inheritance. Many parents choose 25 as a starting point because most people have more life experience and financial maturity by then. But you can pick any age that makes sense for your family.
Staggered Distributions Protect Your Kids
Instead of giving your children everything at once, you can set up distributions at different ages. A common approach is to give them one-third at 25, another third at 30, and the final third at 35. This way, if they make mistakes with the first distribution, they still have more coming later.
Some parents add conditions to these distributions. You might require your child to finish college or trade school before getting the first payment. Or you could say they need to be employed or involved in a career path. The trustee verifies these conditions before releasing the money.
While the trust is active, the trustee can use the funds for your child’s education, healthcare, housing, and general support. This means your kids are taken care of throughout their childhood and young adulthood, not just when they hit a certain birthday.
Trusts Keep Assets Out of Probate
Another benefit of trusts is avoiding probate court. Probate is the legal process of validating a will and distributing assets. It can take months or even years, and it costs money. During probate, your assets are frozen, which can create financial hardship for your family.
Property in a trust doesn’t go through probate. It passes directly to your beneficiaries according to the trust terms. This saves time, reduces costs, and keeps your family’s financial details private since probate records are public.
Getting Beneficiary Designations Right
Your life insurance policy, retirement accounts, and bank accounts let you name beneficiaries who receive the money when you die. These designations override what’s in your will, which is why they’re so important to get right.
Many parents list their spouse as the primary beneficiary and their children as secondary beneficiaries. That seems logical, but it can create problems. If your kids are minors when they inherit these accounts, the court might appoint a guardian to manage the money until they turn 18.
A better approach is naming your trust as the beneficiary for accounts meant for your children. This way, the money flows into the trust you’ve carefully designed, and your chosen trustee manages it according to your instructions.
Review these beneficiary designations every few years and after major life events. When you have another child, get divorced, or remarry, your beneficiaries should probably change. Outdated designations cause confusion and can result in the wrong people getting your money.
Powers of Attorney Protect Your Family Now
Estate planning isn’t just about what happens after you die. It’s also about protecting your family if you become unable to make decisions while you’re still alive.
A durable power of attorney lets you name someone to handle your finances if you’re incapacitated. This person can pay your bills, manage your investments, file your taxes, and make other financial decisions on your behalf. Without this document, your family would need to go to court to get authority over your finances.
Choose someone you trust completely for this role. They’ll have access to your money and property, so pick someone responsible and honest. Your spouse is often the best choice, but name a backup in case they can’t serve.
Healthcare Decisions Need Advance Directives
Advance healthcare directives tell doctors and hospitals what medical treatment you want if you can’t speak for yourself. This includes decisions about life support, organ donation, and end-of-life care.
These documents spare your family from having to guess what you would want during a medical emergency. The emotional burden of making healthcare decisions for a loved one is enormous. Your advance directive removes that weight from their shoulders because your wishes are clearly stated.
Healthcare directives become especially important if you and your spouse are both injured in the same accident. Without these documents, extended family members might disagree about your care, leading to conflict during an already difficult time.
Understanding the Tax Side of Estate Planning
Most people don’t have to worry about federal estate taxes. The federal exemption is over $13 million per person, which means estates smaller than that don’t owe federal estate tax. Idaho doesn’t have a state estate tax either, so many families won’t face tax issues.
But that doesn’t mean you should ignore tax planning completely. Life insurance proceeds, retirement accounts, and other assets can have income tax consequences for your beneficiaries. Structuring your estate plan properly can minimize these taxes and preserve more wealth for your children.
Gifting assets during your lifetime is one strategy. You can give a certain amount each year to your children without triggering gift taxes. This gradually reduces the size of your taxable estate while letting you help your kids when they need it most.
Trusts also offer tax advantages. Some types of trusts remove assets from your taxable estate, which can result in significant savings. An experienced estate planning attorney can explain which strategies make sense for your specific situation.
Keeping Your Plan Current
Creating an estate plan isn’t a one-time task. Life changes, and your plan needs to change with it. Review your documents every three to five years at minimum, and always after major life events.
Getting married or divorced obviously requires updates to your plan. But smaller changes matter too. If you move to a different state, the laws governing your estate might be different. When your children reach adulthood, you might want to change how their inheritance is structured. If the guardians you named move away or become unable to serve, you need new ones.
Changes in tax laws can also affect your plan. Congress periodically adjusts estate tax exemptions and other rules. An estate planning attorney can help you understand whether these changes impact your family and what adjustments you should make.
Don’t forget to update your beneficiary designations when you update your will and trusts. These need to work together for your plan to function properly.
The Real Cost of Waiting
Some parents put off estate planning because they think it’s expensive or complicated. Others figure they’re young and healthy, so they have plenty of time. But accidents and unexpected illnesses happen to people of all ages. The cost of creating an estate plan is nothing compared to the cost of not having one.
Without a plan, your family faces court costs, attorney fees, and potential tax penalties. More importantly, they face uncertainty and stress during an already difficult time. Your children might end up with the wrong guardian or receive their inheritance too early. Family members might fight over your estate. None of these problems exist when you have a proper plan in place.
Working with an attorney who focuses on estate planning makes the process straightforward. They know the questions to ask and can explain your options in plain language. Most estate plans for young families can be completed in a few weeks once you make your key decisions.
Taking the Next Step
Your children depend on you for everything right now. Creating an estate plan is one of the most important ways you can protect them. It ensures they’ll be cared for by people you trust and gives them financial security no matter what happens.
Foley Freeman, PLLC, helps Idaho families create comprehensive estate plans that address guardianship, trusts, healthcare directives, and all the other pieces that keep your family protected. We’ll walk you through each decision and answer your questions in language that makes sense, not legal jargon that confuses you.
Don’t leave your children’s future up to chance or the court system. Call us at 208-888-9111 to schedule a consultation. We’ll help you build a plan that gives you peace of mind and keeps your family secure.