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Estate planning for families with children
Three things to know
- If you die without a will, a court decides who raises your children and controls their inheritance.
- A trust could help give you control over how and when your children receive their inheritance, while life insurance helps fund short-term needs and long-term goals.
- Estate planning isn’t a one-time document. It’s an ongoing relationship with a financial professional who keeps your intentions aligned with your family’s real life.
No parent wants to picture a world where they’re not there for their children. That’s why many parents put off estate planning, even though it’s one of the most important things they can do for their kids.
An estate plan ensures that if you’re no longer around, your children are being raised by someone you chose. It can identify funds to support them and a trusted adult to make financial decisions on their behalf until they come of age.
If you die without a will—a situation lawyers call dying “intestate”—state laws decide who inherits your assets, and a probate court decides who raises your minor children. The court considers your wishes only if they’ve been put in writing, yet fewer than one in three Americans has a will.1
A solid estate plan for a family with young kids pulls together four essential pieces:
- A will that names a guardian and directs your assets
- A trust that controls how and when your children inherit
- Up-to-date beneficiary designations on every financial account
- Life insurance that funds your children’s futures
Wills for parents with young children
One of the most important jobs a will does is naming a guardian—the adult who raises your kids if both parents die. Without a named guardian, the probate court decides who steps in. The judge making that call doesn’t know you or your family.
One thing most parents miss: The person raising your child and the person managing your child’s inheritance don’t have to be the same person. You can name two different people depending on their strengths:
- Perhaps a sibling shares your values about parenting and would be the right person to raise your kids.
- Maybe an in-law is better suited to manage the money until they’re older.
Choosing a guardian is personal, and a financial professional can help you navigate the decision.
Trusts for children
A trust is a legal arrangement that holds an inheritance on your child’s behalf. It spells out how the money can be used and when your child will receive it. Without a trust, any inheritance a minor receives is usually held under court supervision until they turn 18 or 21, depending on the state.
A trust lets you control three things:
- Who manages the money (the trustee)
- When the child receives it (often in stages, not a lump sum)
- What the money can be used for—housing, education, medical needs, starting a business
Without a trust, the court holds your money until your child comes of age, and then whatever’s left gets handed over in one distribution, with no guardrails on how it’s spent.
Trusts aren’t just for wealthy families. If you have life insurance and minor children, you could likely benefit from a trust. This can be set up inside a will (a testamentary trust) or on its own (a revocable living trust). An estate planning attorney can recommend one that fits your situation.
Life insurance and estate planning
Life insurance can be a powerful financial tool in a parent’s estate plan. While estate planning documents establish legal instructions, life insurance may help provide financial support for your children’s future needs.
Wills, trusts, and life insurance work together. Wills establish who will raise your child and who will manage their inheritance. Trusts can help determine when and how that inheritance is managed. Life insurance can help fill in the gaps of their childhood expenses and funds their futures into adulthood. This is an important consideration, because when raising a child, the numbers can add up fast: For example
|
~$320,000, before college2 |
|
|
~$13,200/year2 |
|
|
$11,950/year, before room and board3 |
A common starting point for determining coverage is to establish 10 to 12 times your annual income as your base, adjusted for your mortgage, expected college costs, and how many years your kids still need support at home.
Ideally both parents should have coverage, even a parent who stays home. Don’t think about a policy as replacing one paycheck. Think about what it would cost to replace the income and the unpaid work parents do—child care, household management, transportation, meal planning. A financial professional can work with you to help figure out how much you may need.
Estate planning for parents: Putting the pieces together
When the pieces of an estate plan aren’t coordinated, gaps open up. Three factors that can make or break a parent’s final wishes: incorrect beneficiary designations, irregular updates, and the lack of guidance and oversight from a financial professional.
A beneficiary designation is the form you fill out at a bank, insurance company, or retirement plan that names who receives that asset when you die. Here’s what catches most parents off guard: A beneficiary designation overrides your will, every time. A policy that still names an ex-spouse will pay the ex-spouse, no matter what your will says.4
Beneficiary designations live on:
- Life insurance policies
- 401(k) and IRA accounts
- Payable-on-death bank accounts
- Transfer-on-death investment accounts
Naming a minor child as a beneficiary usually triggers court supervision, so a common workaround is to name a trust for the child, or an adult you’d want managing the money. Name a backup beneficiary as well, in case the first one can’t serve.
An estate plan isn’t something you write once and file away. Life changes should trigger a review:
- Birth or adoption of a child
- Marriage, divorce, or remarriage
- Death of a named guardian, trustee, or beneficiary
- Moving to a new state
- A major change in assets—inheritance, home purchase, new business
- Your children reaching key ages (18, 21, 25)
This is all a lot to remember on your own, but a financial professional’s job is to flag these gaps and check in with you regularly. They can also connect you with an estate planning attorney for legal advice and documentation.
Estate planning for elderly parents
Many parents raising young children are also helping their own aging parents think about estate planning. If that’s you, you’re known as the sandwich generation. A financial professional can help coordinate family financial matters across generations without losing focus on your own family’s needs.
What New York Life can offer
A New York Life financial professional can help parents coordinate the financial pieces of an estate plan and connect you with an estate planning attorney for legal advice and documentation.
Frequently asked questions
A probate court decides who raises your minor children and who manages any inheritance on their behalf. The court considers your wishes only if you’ve put them in writing, usually in a will. Without one, a judge who doesn’t know your family makes that decision for you.5
A common starting point is 10 to 12 times your annual income, adjusted for your mortgage, future college costs, and how many years your children still need financial support. Stay-at-home parents also need coverage to replace the unpaid labor they provide. A financial professional can help you calculate an amount based on your family’s needs and circumstances.
Most parents of minor children can benefit from some form of trust, not because they're wealthy, but because a trust controls when and how a child receives an inheritance. Without one, the money may be held under court supervision until the child turns 18 or 21 and then paid out all at once.
Choose someone whose life situation, values, and capacity you know firsthand, and who has actually agreed to take on the role. The guardian raising your children doesn't have to be the same person managing their inheritance; those can be two different people with two different strengths.
At a minimum, after any major life event, a birth, marriage, divorce, death of a named party, or move to a new state. A general review every three to five years is a helpful rhythm. Your financial professional can build these check-ins into an ongoing relationship focused on your family’s evolving needs.
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1Caring.com. "2024 Wills and Estate Planning Study." 2024. https://www.caring.com/resources/2024-wills-survey
2U.S. News & World Report. "This Is How Much It Costs to Raise a Child in 2025." August 7, 2025. https://money.usnews.com/money/personal-finance/articles/how-much-does-it-cost-to-raise-a-child
3College Board. "Trends in College Pricing: Highlights, 2025–26." Published November 2025. https://research.collegeboard.org/trends/college-pricing/highlights
4Internal Revenue Service. "Retirement Topics — Beneficiary." https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-beneficiary
5FindLaw. "Probate Process Without a Will." Last reviewed July 24, 2025. https://www.findlaw.com/estate/probate/probate-process-without-a-will.html
The information in this article is for educational purposes only and is not intended to be an offer for any specific product. Neither New York Life nor its affiliates are in the business of offering tax advice. You should consult with your professional advisors to examine tax aspects of any topics presented.