TOOLKIT FOR PARENTS · AGES 3–14
Estate Planning Essentials: Ages 3–14
As a child grows, an estate plan built during the early years needs to grow with it.
The foundational documents put in place earlier – a will, powers of attorney, and a will that directs assets toward a Special Needs Trust rather than to a child directly – remain the core of the plan. What changes at this stage is the level of detail families are ready to add. Two areas in particular have become relevant now: how to give financial support to a child during a parent’s lifetime without jeopardizing benefits, and who should be trusted to manage a Special Needs Trust once it holds meaningful assets.
The Core Documents, Revisited
A Last Will and Testament, a Revocable Living Trust, a Durable Power of Attorney, a Health Care Power of Attorney with authorization under the Health Insurance Portability and Accountability Act (HIPAA), and a Living Will or Advance Directive together form the foundation of an estate plan. Families who established these documents earlier should treat this stage as a checkpoint rather than a fresh start, confirming that guardianship designations, trustee language, and powers of attorney still reflect the family’s current circumstances and the child’s needs as they’ve become clearer with age.
Lifetime Gifting Strategies
Many families want to support their child financially during their own lifetime, not only through an eventual inheritance. Doing so safely requires understanding a few specific rules.
The federal government allows individuals to gift up to an annually adjusted exclusion amount to any number of recipients each year without triggering gift tax. Gifting directly to a child with a disability, however, can jeopardize eligibility for Supplemental Security Income (SSI) and Medicaid if the gift is not directed appropriately. Gifting into a Special Needs Trust preserves that eligibility, and gifting into an Achieving a Better Life Experience (ABLE) account offers a simpler alternative that requires less administration than a trust.
Medical and educational expenses paid directly to a provider, rather than to the child or family, are treated differently. These payments do not count toward the annual gift exclusion and do not affect benefit eligibility, making them a useful and often underused planning tool.
Why Trust Planning Usually Outperforms Outright Gifts
A direct gift or inheritance, even a well-intentioned one, can disqualify a child from benefits that took years to establish. A properly structured Special Needs Trust avoids this risk while still allowing a family to provide meaningfully for a child’s quality of life, covering things a program like Medicaid does not, from therapies and equipment to travel and personal care.
Trusts also offer a level of control that outright gifts cannot. A family can build in guidance for how and when funds should be used, including provisions tied to specific milestones or safeguards against misuse. Where possible, a third-party Special Needs Trust, funded with a family’s own assets rather than the child’s, is generally preferable to a first-party trust, largely due to differences in how each is treated after the beneficiary’s death.
Choosing a Trustee
Once a trust is funded with meaningful assets, the question of who manages it becomes real rather than theoretical. A trustee needs both financial competence and a genuine understanding of the child’s needs, which is not always the same person. Some families choose a professional co-trustee, such as a bank or trust company, to provide financial oversight and continuity, particularly when the family anticipates the trust operating for decades. Naming the child themselves as trustee is generally avoided, since doing so can interfere with the very benefit eligibility the trust was designed to protect.
This decision does not need to be made in isolation. It connects directly to the rest of a family’s broader plan, including who holds power of attorney, who is named guardian, and how the family’s overall assets are structured.
A Story Worth Keeping Current
As your child grows, so does the story worth preserving in a Letter of Intent. Download the fillable template below and update it as routines, preferences, and milestones change.
Ready to Review Your Child’s Estate Plan?
A plan built years ago deserves a fresh look as your child grows. Let’s make sure every document, gift, and trustee decision still fits your family.