When a Will Isn’t Enough: Protecting Your Children With a Trust
Guardianship, an outright inheritance at eighteen, and a single missing paragraph in your beneficiary forms can undo everything you meant to leave behind. Here’s what every parent – and especially every physician family – should understand in 2026.
By Ron A. Rhoades, JD, CFP® and Chris Brown, Ph.D., CFP®
Dr. Elena Reyes and her husband, Marcus, did one thing right. They had wills.
On a Tuesday evening, driving home from dinner, another car ran a red light. Marcus and Elena were killed. Their children – ages eight and six – survived them.
What the Reyes family did not have was a trust. Not a revocable living trust. Not even a trust written into their wills. The law took over. Their estate went through probate – the public, court-supervised process of settling what a person leaves behind. Because the children were minors, a court appointed a guardian to manage their money. And because the wills left everything to the children outright, the law handed each child his full share the day he turned eighteen.
A few years later, one was a college freshman. The other had just finished high school, but in expectation of the inheritance chose not to attend college. Neither had ever managed more than a part-time paycheck.
By twenty-two, the money was gone.
Estate planners tell this story because they have watched versions of it happen. It is also completely avoidable.
Why “just a will” leaves your children exposed
A will is far better than nothing. But a will does three things that people don’t expect.
First, it guarantees probate. A will is your instruction sheet for the probate court – it does not avoid the court. Probate is public, it can take months to more than a year, and it costs money your children could have used.1
Second, it can force a guardianship of your children’s money. Minors can’t legally control significant assets, so when a will leaves money to a minor, a court usually appoints a property guardian – often supervised, often expensive, and answerable to a judge rather than to your wishes.
Third, it ends at the worst possible moment. When the child reaches the age of majority – eighteen in most states, twenty-one in some – the guardianship ends and the balance is handed over.2 All of it. At once.
You might be thinking: but I’ll name a guardian to raise my kids. Good – you should. Just know that the person who raises your children (the guardian of the person) and the arrangement that manages their money are two different decisions. A will handles the first. It handles the second badly.
While a will can contain a trust (called a “testamentary trust”), revocable living trusts (created during your lifetime) are often the preferred vehicle, in most states.
What a revocable living trust actually does
A revocable living trust is a legal arrangement you create while you’re alive and can change anytime – that’s the revocable part. You move your assets into it, and you name a trustee to manage them under written instructions you wrote.
While you’re alive and well, nothing changes. You stay in control. But if you and your spouse die, the trust does what a will cannot.
It skips probate. Assets in the trust pass privately, without the court.
It puts a person you chose – not a judge – in charge of your children’s money.
And it lets you decide, in advance, exactly how that money is used and when it’s released. Instead of a lump sum at eighteen, your trust can provide for your children’s health, support, and education for as long as they need it, then distribute what’s left in stages – say, a third at thirty, half the rest at thirty-five, the balance at forty. Old enough to use it well.
Had the Reyes children’s inheritance been held in a trust like that, there would have been money for college, for a first car, for a start in life – and there would still have been money at twenty-two, and beyond.
The retirement-account trap most parents miss
Here’s where good intentions quietly fail.
Your largest assets – your 401(k), 403(b), IRA, and life insurance – usually don’t pass through your will or even your trust. They pass by beneficiary designation, the form you filled out with your employer or custodian. Whoever is named on that form wins, full stop.
Parents name their spouse. Smart. But they often name their young children as the backup – or name no backup at all. Naming a minor directly drops you right back into guardianship and an outright payout at eighteen.
The fix is to name a properly drafted trust as the backup beneficiary. But the trust must be written correctly, because retirement accounts carry their own rulebook.
Under the federal SECURE Act 2.0, most people who inherit a retirement account must now empty it – and pay the income tax – within ten years.3 There’s no more lifelong “stretch” for the typical adult heir. But the law keeps longer payout periods for certain eligible beneficiaries: a surviving spouse (who usually will rollover an IRA or other retirement account into her/his own IRA), a disabled or chronically ill beneficiary (who possess the right to withdraw monies over their life expectancies), and your own minor children, who are treated as eligible until age twenty-one and then fall under the ten-year clock.4
To capture those longer payouts through a trust, the trust must qualify as a see-through trust – drafted so the law can look through it to the people who benefit. Get the language right and your trust preserves the ten-year payout for ordinary heirs, or the much longer life-expectancy payout for a minor or a special-needs child. Get it wrong, and the account can be forced out in as little as five years – accelerating the tax and shrinking what your children receive.5
This is not boilerplate. It is the difference between a trust that helps and a trust that backfires.
A young physician’s setup
Picture Dr. Aaron Patel. He’s thirty, married to Nicole, with their first child on the way. His net worth is mostly future earnings – he’s just starting out – but he’s already doing the two things that matter.
His 403(b) names Nicole as the primary beneficiary and a trust as the alternate. His substantial term life policy – say, $2 million – does the same: Nicole first, the trust second.
If Aaron dies, Nicole inherits directly and simply. But if something takes them both – the risk every parent of a newborn quietly fears – the trust catches everything. The life insurance and the retirement account flow into a single set of instructions that provide for their child’s care and education, managed by someone they chose, released on a schedule they set. And because the trust is drafted as a see-through trust, their child keeps the favorable retirement-account payout instead of losing it.
Aaron isn’t wealthy yet. He doesn’t need to be. He needs the structure in place before he is.
For physician couples with real wealth: the SLAT
Some of you are further along. Your practice has equity, your investments have grown, you own real estate, and you carry significant life insurance. For married physicians with substantial net worth, one tool deserves a close look: the spousal lifetime access trust, or SLAT.
A SLAT is an irrevocable trust one spouse creates for the benefit of the other. You make a completed gift into it – using your lifetime gift and estate tax exemption – and from that point on, those assets, and all their future growth, sit outside your taxable estate. Because your spouse is a beneficiary, your family can still reach the money during your spouse’s life. You give it away for tax purposes without fully giving it up in practice.
For physicians, the SLAT does double duty. An irrevocable trust with a spendthrift provision – one that keeps the assets out of a beneficiary’s creditors’ reach – is among the stronger shields against future lawsuits, a real concern in a profession exposed to malpractice claims.6 The catch: this only works if you fund it before a claim arises. Move assets to dodge a known or threatened lawsuit and a court can unwind the transfer as a fraud on creditors.
Two cautions. If both spouses set up SLATs for each other, the trusts must be meaningfully different – different terms, amounts, timing, and powers – or the IRS can collapse them under the reciprocal trust doctrine and pull the assets back into your estates.7 Many physician couples address this by staggering the trusts and varying their terms, sometimes funding a series of them over years. And a SLAT is irrevocable – if your beneficiary spouse dies first, or you divorce, your indirect access can disappear. This is attorney-and-financial planner territory, not a do-it-yourself project.
The 2026 numbers – and a word on portability
Why act now, when the estate tax exemption has never been higher? In 2026, each person can pass $15 million free of federal estate and gift tax – $30 million for a married couple – up from $13.99 million in 2025.8 The 2025 federal tax law (the “One Big Beautiful Bill Act”) made that $15 million figure permanent and indexed it to inflation. You can also give up to $19,000 per recipient in 2026 without touching that lifetime amount.9
“Permanent,” of course, lasts only until a future Congress changes its mind. And a SLAT lets a couple lock in today’s exemption – and remove decades of future appreciation – while both spouses are alive.
One more piece every married couple should know: portability. When the first spouse dies, the survivor can add the deceased spouse’s unused exemption to their own – potentially preserving millions in tax-free transfers. But it isn’t automatic. Someone must elect it, usually by filing a federal estate tax return (Form 706) within nine months of the death.10 Don’t assume it happens on its own.
Beyond the basics
This is an introduction. For higher-net-worth individuals and couples, there are many more techniques – irrevocable life insurance trusts, grantor retained annuity trusts, qualified personal residence trusts, charitable trusts, family entities, dynasty trusts – each with its own rules and trade-offs. They’re beyond the scope of this article, and beyond the reach of any template. They call for personalized advice.
The one thing to do next
Most people don’t avoid estate planning because it’s expensive. They avoid it because it asks them to imagine not being here. But the plan isn’t for you. It’s for an eight-year-old and a six-year-old, on some ordinary Tuesday you’ll never see coming.
The Reyes children didn’t need their parents to be wealthy. They needed a paragraph in a trust. Build the structure now – while the only cost is an afternoon.
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About the Author
Ron A. Rhoades, JD, CFP® is an estate planning attorney and a member of The Florida Bar. He is also a Certified Financial Planner™ and serves as a financial advisor and co-founder of Scholar Financial, LLC, a fee-only, fiduciary financial planning firm operating as a practice within XY Investment Solutions, LLC, an SEC-registered investment advisory firm.
Disclosures
This article is for educational purposes only and is not legal advice. Estate planning laws vary from state to state and change over time. Before you act, consult a qualified estate planning attorney licensed in your state of residence. A fee-only CERTIFIED FINANCIAL PLANNER™ professional can guide you through the estate planning process and help you choose the right attorney for your situation.
This article is for educational purposes only. The characters depicted are fictional and any relation to real persons is solely incidental. Scenarios and references to real people or experiences are used solely to illustrate educational concepts. These examples may not apply to your individual circumstances. It should not be construed as financial, legal, tax, or investment advice, nor as a recommendation to implement any specific strategy, product, or investment.
Advisory services are offered through XYPN Sapphire and its various IAR brands under which it operates. XYPN Sapphire is an SEC registered investment adviser. For additional disclosure and privacy information, please visit XYPNSapphire.com/disclosures.
References
- American Bar Association, Guide to Wills and Estates (4th ed., 2013); or AARP Public Policy Institute, A Look at Probate Costs and Timing Across States.
- Uniform Law Commission, Uniform Transfers to Minors Act (1986, as enacted in various states); see also state-by-state surveys published by the American Bar Association’s Section of Real Property, Trust and Estate Law, available at americanbar.org.
- SECURE 2.0 Act of 2022, Pub. L. No. 117-328, Division T (enacted December 29, 2022); Internal Revenue Code §§ 401(a)(9), 402(c); IRS Notice 2023-54 and IRS Notice 2024-35 (providing interim guidance on required minimum distributions under SECURE 2.0).
- IRC § 401(a)(9)(E)(ii)(III); Treas. Reg. § 1.401(a)(9)-4.
- IRC § 401(a)(9)(B)(ii); Treas. Reg. § 1.401(a)(9)-3.
- The degree of protection for SLAT varies by state law and individual circumstances, and no strategy eliminates all risk.
- United States v. Estate of Grace, 395 U.S. 316 (1969); Treas. Reg. § 20.2036-1.
- Tax Cuts and Jobs Act of 2017, Pub. L. No. 115-97 (as modified); and the legislation the article refers to as the “One Big Beautiful Bill Act.”
- IRC § 2503(b)
- IRC § 2010(c)(5)(A); Treas. Reg. § 20.2010-2; Rev. Proc. 2022-32
