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Idaho Estate Planning Keeping Your Kids From Blowing Through Their Inheritance

By Lane V. Erickson, Idaho Estate Planning Attorney

I read a recent article online about a mother who was seeking advice from a financial planner about how to do her estate planning. In particular, this mother was concerned that her daughter, who was already an adult, would spend her entire inheritance immediately after receiving it. In other words, she was concerned that her daughter would blow through her inheritance and have nothing to show for it. She wanted to know what her options were, and what she could do to protect the inheritance and yet still provide for her daughter. 

I enjoyed this article because it highlighted the fact that each of us wants to do what we believe is best for our family members and loved ones. This is an issue that comes up regularly when we work to create a customized estate plan for each of our clients. We use our customized Estate Planning Questionnaire and our free 30-minute consultation with our clients to determine exactly what it is they want to accomplish. Once we know what this is, we did work to get it done exactly how our clients intend it to be done. 

When it comes to kids, parents are always concerned about how an inheritance will affect them. Particularly, parents are concerned about whether their children are capable of handling an inheritance. Parents want a solution when it is apparent that an inheritance will cause problems for their children. Our job is to provide a solution. The easiest solution when it comes to kids is to use a trust as part of the estate plan. 

Trust for Kids With Bad Habits

For example, I recently had a parent come to me who wanted to create an estate plan. In discussing their family members and their particular circumstances, it became clear that this parent had a child who was terrible at handling finances and money. In all other areas of their life this child was responsible and handled things maturely and well. However, for some reason, when it came to finances and money, this child was a disaster. 

Similarly, another parent came to me seeking advice for their estate plan because they had a child who suffered from drug and alcohol related addictions. This parent wanted to provide for this child, the same way they were providing for all their other children, but they were concerned about leaving a sizable amount of money or property to this child. They were convinced that if they did this, the inheritance would feed the addiction and cause it to become worse. 

There are many other circumstances that are similar to these. In all of these circumstances, a trust is perhaps the best tool these parents can use as part of their estate plan. The reason for this is that the parents can direct how the trust will operate. By doing this, the trust will control if and when distributions are made from the trust to their child. Alternatively, a parent could provide directions in a trust stating that the inheritance will be used for the benefit of the child without ever giving the money, property, or other assets from the trust directly to the child. 

Trust for Kids With Disabilities

When it comes to leaving an inheritance for kids who have disabilities, a trust can do almost exactly the same thing. Many times, children who have disabilities are receiving benefits from programs offered by federal and state governments. The only issue is these programs often have eligibility requirements. If the disabled child receives income, or holds assets above a certain level, they may lose their eligibility to continue to receive these benefits. 

A trust can be used as a way of supplementing the needs for a disabled child who is receiving benefits without giving money, property, or other assets directly to the disabled child. This is often called a third-party supplemental needs trust. These are commonly used for children with disabilities and are one of the most useful ways for a parent to provide for their child in the best way possible. 

Trust for Kids Who are Minors

The last area that we will discuss in how to keep your children from blowing through their inheritance has to do with kids who are minors. In Idaho, a minor aged child is any child who is under the age of 18. When a person reaches the age of 18 in Idaho, they are considered a legal adult.

If you have a minor aged child that you leave a portion of your estate directly to, that share of the inheritance actually goes to the minor child’s legal guardian. The guardian is required to hold that inheritance until the child reaches the age of 18 and becomes a legal adult. When that happens, the guardian has no discretion. They are simply required to turn over the entire inheritance to the child at the age of 18.

When I explain this to most parents who have young children, they all agree that it would likely be a disaster for a child who just turned 18 years old to receive a large inheritance of money or property. The reason for this is because even when a person turns 18 and becomes a legal adult, they likely don’t have much experience or maturity yet. As a result, if they were to receive a large amount of money, they would likely blow it. 

The solution to this problem is to create a testamentary trust for your minor aged children. In this type of trust, you have the ability to state the specific ages, and any other requirements that you would require to be met, before any distributions from the trust would be made directly to your children. In the meantime, the trustee can use the money in the trust to provide for your children without giving any money directly to them.

If you are concerned about your children blowing through their inheritance, there are some steps you can take to help prevent this from happening. We have worked with many clients who have had this issue and concern, and we are confident that we can help you too! Please call us today for a free 30-minute consultation. 

Enlist an Idaho Estate Planning Attorney To Help You

Our team of Idaho lawyers can help you with any of your estate planning or probate needs. Whether you are seeking to create or review an estate plan for yourself or would like to help a loved one, we are available to discuss your options and answer your questions at an initial free 30-minute consultation. Call us toll free at 877-232-6101 or 208-232-6101 for a free consultation. You can also email us directly at or stop by our office at 201 East Center Street, Pocatello, Idaho 83201. We will answer your questions and help you solve your Idaho Estate Planning problems.

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