Episode 86: Why I Won't Leave My Kids Cash
Episode 86
Host: Jill Mastroianni
Why I Won't Leave My Kids Cash
If your children inherited a million dollars tomorrow, would you want them to receive a check—or a trusted guide?
In this episode, Jill pulls back the curtain on her own family's estate plan and walks you through exactly what would happen if she and Jeremy died while their children were still young. Using their own Wills, life insurance beneficiary designations, and testamentary trusts as real-life examples, she translates complicated legal language into plain English so you can understand how trusts actually work—and why they aren't just for wealthy families.
Along the way, Jill explains why she intentionally chose to leave her children's inheritance in trust, how trustees make financial decisions, and why thoughtful estate planning is really about giving your family guidance when you can no longer be there yourself.
What You’ll Learn in This Episode
Why trusts aren't just for wealthy families.
What your Will actually does if you have minor children.
Why the person raising your children isn't always the best person to manage their inheritance.
How life insurance beneficiary designations work alongside your estate plan.
Why naming your estate as a contingent beneficiary can be intentional.
What probate looks like when a life insurance policy is payable to your estate.
The difference between specific gifts and your residuary estate.
How testamentary trusts are created through a Will.
What a trustee actually does.
What “HEMS” (Health, Education, Maintenance and Support) means in a trust.
Why “sole and absolute discretion” gives trustees flexibility rather than confusion.
What a “disinterested trustee” is and why one may be the best person to make major financial decisions.
How trusts can help pay for extraordinary opportunities like: buying a first home, starting a business, professional education, and wedding expenses
Why trusts are designed to help beneficiaries enjoy their inheritance, not simply preserve it.
Resources & Links
Watch this episode on YouTube: https://youtu.be/AVXdVUB6_eg
Episode 19: Why You Need (or Don’t Need) a Trust: https://www.deathreadiness.com/podcast/episode-19-how-to-know-if-you-need-a-trust
Tennessee Estate Planning: https://www.deathreadiness.com/estate-planning-solution
Tennessee Probate: https://www.deathreadiness.com/probate-solution
Need to Update Your Tennessee Estate Plan? Learn more about Jill's flat-fee Tennessee estate planning services: https://www.deathreadiness.com/estate-planning-solution
Connect with Jill:
· Website: DeathReadiness.com
· Email: jill@deathreadiness.com
· Learn more about Jill’s solutions
· Subscribe to the Death Readiness Dispatch!
· Ask a question for Tuesday Triage
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What actually happens if your children inherit a million dollars? Today, I walk you through my own family's estate plan—from the life insurance beneficiary designation to the Will to the trust—and translate every confusing legal phrase into plain English. Along the way, you'll learn why my husband and I chose to leave our children's inheritance in trust and why trusts aren't just for wealthy families.
Welcome to The Death Readiness Podcast. This is not your dad’s estate planning podcast. I’m Jill Mastroianni — estate planning attorney, death readiness guide, and your translator for wills, trusts, probate, and the conversations most families avoid. If you’ve been wondering things like, ‘Can a trust protect what I leave to my children?’ ‘What happens if I give someone power of attorney over me?’ and ‘How can I help my parents while respecting their independence?’ You’re in the right place.
My daughter April recently started her first job. She's working as a staff waitress at an old-timey resort on the lake where my dad lives. One of my favorite parts of the whole arrangement is how she commutes to work. Our neighbors have a little boat they've generously lent her for the summer. Their grandchildren all learned to use it over the years, so it's affectionately known as the "Cousins' Boat."
A couple of summers ago, they gave it a fresh coat of purple paint because April got to choose the color. And when they repainted the name, April made a suggestion. And now, on one side of the boat, the first "S" in Cousins is actually a dollar sign—fitting since it’s giving her a way to earn her first paychecks.
So now my fifteen-year-old daughter climbs into this little purple boat each day, and pilots herself across the lake. As a parent, it's exciting to watch. Every new responsibility comes with a little more independence. But every new responsibility also comes with new decisions.
We don't wake up one morning and say, "Okay, you're fifteen. Good luck." We teach, guide and answer questions. We help our kids think through decisions until, little by little, they learn to make those decisions on their own.
Watching April head off to work this summer has reminded me that parenting is really a long process of preparing yourself to become less necessary.
Estate planning asks a version of that same question. If Jeremy and I weren't here anymore, who would help our children make life's biggest financial decisions?
For our family, part of the answer is a trust. Because despite what many people think, trusts aren't just for wealthy families.
Trusts have a reputation for being a financial tool for the wealthy. And it's true—there are some trusts that are designed for very wealthy people. But there are also trusts for families like mine. Families who simply want to make life a little easier for the people they love.
In fact, if I die before my husband Jeremy, I don't leave my assets in trust for him. Everything goes directly to him. But if both of us die, our estate plan changes. That's when trusts come into play.
Why?
Because our daughter is fifteen years old, and our son is twenty-two. Now, let's imagine for a moment that Jeremy and I both die in a tragic accident. Thankfully, that's incredibly rare. But rare doesn't mean impossible. And because it's one of the situations estate planning is designed for, we have to think about it.
Unfortunately, there are families who have lived through exactly that. Earlier this year, on New Year's Day, a married couple from Georgia was killed in a car accident while out on a date night. They left behind three children, all four years old or younger. During the COVID-19 pandemic, more than 140,000 children in the United States lost a parent or grandparent caregiver.
I've also seen this much closer to home. My very first boss as an attorney served as trustee for two young women whose parents had both died in an accident. Later, I worked with a financial planner whose parents raised her young cousins after those cousins lost both of their parents.
I'm not suggesting it's likely that you'll die anytime soon or, if you're raising young children with a partner, that both of you will die together. Estate planning isn't about preparing for what's most likely. It's about making sure the people you love are protected if the unthinkable happens.
If you have minor children, your Will can do two really important things. First, it allows you to nominate the person you want to raise your children. Second, it allows you to decide who should manage the money you leave behind for them. And those aren't always the same person.
The person who's wonderful at bedtime stories, helping with homework, and cheering from the sidelines at soccer games isn't necessarily the same person who's comfortable managing a million dollars for the next twenty years.
Sometimes it's the same person but often it isn't. That's one of the reasons trusts are so helpful. Let me show you what I mean using my own family as an example. Jeremy and I each have a one-million-dollar term life insurance policy. A term policy doesn’t build cash value. They're designed to provide a death benefit if one of us dies during the term of the policy.
I'm not a life insurance professional, so don't take this as financial advice. But here's a simple way to think about the two types of life insurance you'll hear about most often. Term life insurance is like renting an apartment. You have coverage for a specific period of time. When the term ends, the coverage ends.
Whole life insurance is more like buying a home. It's designed to last for your lifetime, and over time it builds cash value. In my case, my term policy ends when I turn sixty.
Now, Jeremy and I own assets besides life insurance. We have retirement accounts, investments, and a home. But to keep this example simple, we're going to focus on just one asset: the life insurance.
Let's say I die first. Jeremy calls the life insurance company to report my death.
And let me pause the story for just a second.
Notice how I didn't say Jeremy spent weeks or months trying to figure out whether I even had life insurance? He knows I have it. He knows which company issued the policy. He knows where to find the policy number. And he knows he's the primary beneficiary.
In this situation, he would be grievng the loss of his wife. The last thing I want is for him to become a detective. One of the greatest gifts you can leave your family isn't money. It's information. Make sure the people you love know what you own, where to find it, and how to access it.
If you're listening in Tennessee and you realize your family doesn't have a plan like this yet—or maybe you have documents, but you're not sure they still reflect your wishes—that's exactly the kind of planning I help families with. Every family is different, and a good estate plan should reflect your family, not just a set of legal forms. You can learn more about my Tennessee estate planning services at DeathReadiness.com/solutions. That’s deathreadiness.com/solutions.
Okay, back to the story. Jeremy sends the life insurance company a death certificate, and they pay him the one-million-dollar death benefit. Now what? Well...he's just lost his wife.
And, if I may say so myself, she was a pretty fantastic teammate. She handled a lot of the day-to-day dog care. She spent countless hours driving our daughter to practices, appointments, and activities. She also contributed a meaningful portion of our household income.
So Jeremy hasn't just lost someone he loves. He's lost his parenting partner, part of his family's income and the person who shared the mental load of everyday life. That million dollars isn't meant to replace me. It can't.
But it can give Jeremy something incredibly valuable: options. He can choose to work fewer hours for a while so he can be more present for our daughter. He can pay off our mortgage so his monthly expenses are lower.
And he can use some of the money to replace the income our family has lost while he figures out what life looks like after such a tremendous loss. And, hopefully, he'll sit down with our financial adviser before making any major decisions.
Okay, let's fast forward five years. Jeremy has now died, too. At that point, our daughter April is 20 years old and our son Travis is 27 years old. So what happens next?
My sister-in-law is our closest local family member, so she goes to our house and grabs the fireproof box where we keep our important documents. Inside, she'll find our Wills, an asset list, account information, and the details she needs to start putting the pieces together.
By the way, my asset list isn't fancy. It's just an Excel spreadsheet.
My sister-in-law will also see \my friend Erin is the named Executor—the person who steps in to administer Jeremy’s estate after we’re both gone.
For today's story, we're going to follow just one task Erin will be responsible for: collecting Jeremy's life insurance. Jeremy is still under sixty, so his one-million-dollar term life insurance policy is still in effect.
Erin finds Jeremy's life insurance policy. The primary beneficiary is me. But I’m already dead. So she looks at the contingent beneficiary. It says, “Estate of Insured.”
In plain English, that means the life insurance proceeds don't go directly to another person. Instead, they become part of Jeremy's probate estate. And now we have to open Jeremy's probate estate before anyone can collect that money. Jeremy and I both have Wills, and we're perfectly comfortable with our estates going through probate.
If your goal is to avoid probate, that's a different conversation. I've done an entire episode on using a revocable trust to avoid probate, and I'll link to that in the show notes.
But in our example, probate is exactly what's supposed to happen. Erin hires a local probate attorney to open Jeremy's probate estate. The court reviews Jeremy's Will and confirms that Erin is the person who should serve as Executor. The court then issues Erin a document called Letters Testamentary.
Don't let the name intimidate you. It's really just the court's way of saying, "Erin is authorized to act on behalf of Jeremy's estate." With those Letters Testamentary in hand, Erin can collect the one-million-dollar life insurance proceeds that are payable to Jeremy's estate.
She deposits those proceeds into an estate account that she has opened to hold the proceeds. So now comes the big question. Who gets the money?
To answer that, Erin has to read Jeremy's Will. The first thing she looks for is whether Jeremy made a specific gift of the life insurance proceeds.
In other words, did he write something like, "I leave all life insurance proceeds payable to my estate to my daughter." Or... "...to my son." Or... "...to the person who promises to keep all of our dogs."
Okay...that last one's a joke. The point is, Erin first wants to know whether Jeremy singled out the life insurance and told her exactly who should receive it. He didn't.
So now she has to keep reading. The next stop is the section of Jeremy's Will called the Disposition of the Residuary Estate. Now, that sounds intimidating, but the residuary estate is really just the catch-all. Think of it this way. If the Will specifically gives away Grandma's wedding ring, that's a specific gift. If it specifically gives away the family cabin, that's another specific gift.
Everything else that passes under the Will eventually ends up in the residuary estate.
So what does the Disposition of Residuary Estate say? It says that everything in Jeremy's residuary estate goes to me. Uh oh. I'm already dead. Did Jeremy forget to update his Will? Well...yes. But in this particular case, that's actually okay. Because if Jeremy never updated his Will after I died, it also means he still has the Will I wrote for him.
And I planned for exactly this possibility. So Erin turns the page and keeps reading. The next section is titled Disposition of the Residuary Estate if My Spouse Does Not Survive Me. In other words... "What happens if Jill dies before Jeremy?" That's where we need to be.
I'm going to read you one sentence from Jeremy's Will. It's going to sound like a foreign language at first... But don't worry. We're going to translate it together.
Here's what it says:
"If my spouse does not survive me, my Residuary Estate shall be divided into as many equal shares as shall be necessary to create one share for each of my then living children and one share for each of my then deceased children who has one or more then living descendants."
Okay... That is a very estate-planning-attorney sentence. Let's unpack it one piece at a time.
The first part says: "...one share for each of my then living children." That's easy enough. Jeremy and I have two living children—Travis and April.
So we create two equal shares. Now let's look at the next part: "...and one share for each of my then deceased children who has one or more then living descendants."
Thankfully, that doesn't apply to our family. Neither of our children has died, so we can skip right over that sentence. So where does that leave us? Two equal shares. Now remember what we're dividing. We're dividing the one-million-dollar life insurance proceeds that were paid into Jeremy's estate. That means Travis's share is five hundred thousand dollars. April's share is also five hundred thousand dollars.
Simple enough. But now comes the really important question. Do Travis and April actually receive those checks? Let's keep reading. The next sentence says: "Each share created under this Article for a living child of mine shall be held in a separate trust and administered and distributed as provided in paragraph A." That's the sentence that changes everything. Instead of writing Travis a check for five hundred thousand dollars and writing April another check for five hundred thousand dollars, each child's $500,000 share is placed into a separate trust. So now we have Travis's Trust and April's Trust.
And each trust comes with its own set of instructions. Those instructions tell the trustee when money can be distributed, how much can be distributed, and what the money can be used for. Now, in the Will I drafted for Jeremy, those rules are exactly the same for both children.
That's not required. You could write one set of rules for one child and a different set of rules for another. But because the rules are identical here, we're going to focus on April's trust for the rest of this episode. Just know that everything I say about April's trust applies equally to Travis's trust. I'm going to read you the actual language from Jeremy's Will again.
The Will creates the trust, and it also contains all of the rules that govern it. Okay. Here's the first rule. "The Trustee may distribute to or apply for the benefit of the Child as much of the net income and principal of the Child's Trust, as the Trustee, in its sole and absolute discretion, deems advisable for the Child's health, education, maintenance and support, up to the complete exhaustion of the Child's Trust."
Okay, let’s translate that. The first phrase says: "The Trustee may distribute to or apply for the benefit of the Child..." That simply means the trustee can either hand money directly to the child or spend money on the child's behalf. For example, instead of giving April a check for tuition, the trustee could pay her college tuition directly to the college.
Next, we have: "...as much of the net income and principal..."
That means the trustee can use not only the earnings generated by the trust—things like interest, dividends, or investment income—but also the original money that was placed into the trust, that original $500,000. In other words, the trustee isn't limited to spending just the investment earnings.
Then we come to another piece of legal jargon: "...in its sole and absolute discretion..."
Estate planning attorneys love the phrase “sole and absolute discretion.” All it really means is that the trustee gets to exercise judgment. The trust doesn't require the trustee to distribute a certain amount every month or every year. Instead, it says, "Trustee, we trust you. Use your judgment."
Next comes a phrase you'll see over and over again if you’re reading a trust: "...for the child's health, education, maintenance and support."
Estate planning attorneys usually shorten that phrase to HEMS. H-E-M-S, which stands for health, education, maintenance and support. These are things like medical bills, tuition, housing, food, clothing, transportation, the ordinary things someone needs to live and thrive.
And finally, the trust says the trustee can make these distributions: "...up to the complete exhaustion of the Child's Trust." That's an important sentence. It means the trustee is allowed to spend every last dollar in the trust if that's what's needed to take care of April. The trustee doesn't have to save money simply so there's something left over for someone else someday.
Now you might be wondering... Can the trustee ever distribute money for something beyond health, education, maintenance, and support? The answer is yes. When I drafted Jeremy's Will, I decided that HEMS alone wasn't enough. Life isn't just about paying bills. Sometimes an opportunity comes along that can change the course of someone's life.
Maybe it's the chance to buy a first home, the opportunity to start a business, or paying for a wedding. Those aren't everyday expenses, but they can be incredibly important. So I added another layer to the trust.
Here's the legal language: "In addition to the foregoing distributions of net income and principal, the Disinterested Trustee, in its sole and absolute discretion, may give assistance, either as a distribution or a loan, to the Child for the following Extraordinary Needs..."
Before we talk about those extraordinary needs, there's one phrase we need to translate. Disinterested Trustee. Despite the name, it doesn't mean the trustee is bored or doesn't care. It simply means they're independent. They don't have a personal financial interest in the decision they're making. You might also hear this called an Independent Trustee.
Here's an example. Imagine your brother is serving as trustee of a trust...that benefits your brother. If he gets to decide whether to distribute another hundred thousand dollars to himself, that's a conflict of interest. Now imagine that same decision is being made by an independent person. They don't get richer if money stays in the trust or comes out of the trust. Their only job is to ask: "What's in the beneficiary's best interest?"
That's why I wanted a disinterested trustee like Erin to make these larger decisions. When we're talking about life-changing opportunities, I want that additional layer of objectivity. So what did I consider an extraordinary need?
Here's what I wrote: "Purchasing a residence; establishing or purchasing a business, trade, or professional practice; providing for the reasonable expenses of the beneficiary's wedding; or any other extraordinary opportunity or expense deemed by the Disinterested Trustee to be in the Child's best interests."
So... What does that actually mean? It means I wanted the trust to be flexible. I didn't want it to pay only for groceries and tuition. I wanted it to be able to help my children build a life. Buying a home, starting a business, paying for a wedding, or maybe another opportunity that I can't even imagine today because life changes.
Notice what these expenses have in common. They're not routine. For example, suppose April wants to use trust money to buy a restaurant. A good trustee shouldn't simply say yes or no. They should ask questions. Is there a thoughtful business plan? Does this make financial sense? Will this opportunity genuinely benefit her over the long term?
Then I added one final sentence that I think ties this whole trust together. Here's what it says: "It is my express intent that the net income and principal of the Child's Trust be used as provided above for the benefit of the Child. In determining whether to make distributions to the Child, the Trustee shall not take into consideration the future needs of any remainder beneficiary of the Child's Trust."
Let's translate that. Imagine April has children of her own someday. If there's money left in her trust when she dies, whatever remains passes to her children. Those future children are called remainder beneficiaries because they receive whatever remains after April's interest in the trust ends.
But this provision tells the trustee not to worry about them. The trustee's job is to take care of April, not to preserve an inheritance for someone else. If taking care of April means spending every dollar in her trust, then that's exactly what I want the trustee to do. Now, the trust goes on to explain what happens if one of my children dies while there's still money left in the trust.
But I think we've had enough legal language for one day. So let's step back for a minute. Why did Jeremy choose to leave his life insurance to trusts for April and Travis instead of simply writing each of them a check? It's not because he doesn’t trust them. It's because he loves them.
If these trusts are ever needed, it means Jeremy and I are gone. We won't be there to help them think through major financial decisions, ask the hard questions, or say, "Maybe sleep on it for a week before you sign anything."
The trust gives them something we won't be able to give them ourselves: A trusted person whose job is to help them make thoughtful financial decisions. It also provides another layer of protection.
Of course, no trust can protect someone from every bad decision. No estate plan can guarantee a perfect life. And I can't keep my children from making mistakes. I’ve certainly made plenty of my own. But I can try to leave them with a little more protection than they would have had otherwise.
One of the biggest misconceptions I hear is this: "If my child's inheritance stays in a trust, they'll never actually get to enjoy it." That's simply not true. We just spent the last few minutes talking about all the ways the trust can be used. Health. Education. Housing. Starting a business. Buying a home. Even helping pay for a wedding. The trust isn't there to keep my children from using the money. It's there to help make sure the money is available when it matters most.
Now, is this the only way to draft a trust? Not even close. Trusts are incredibly flexible. This is simply one example of how Jeremy and I chose to balance flexibility with protection for our family.
If you're in Tennessee, one of the things I enjoy most is helping families think through questions like these. There isn't one "right" trust for every family. Together, we talk about your children, your goals, your concerns, and what would give you the greatest peace of mind. Then we build an estate plan around your family instead of relying on a one-size-fits-all approach. You can learn more at deathreadiness.com/solutions. That’s deathreadiness.com/solutions.
As I prepared for this episode, I kept thinking about that little purple Cousins' Boat. Every day this summer, April climbs into that boat by herself and heads off to work. A few years ago, I never would have let her do that. But little by little, she learned.
And now she doesn't need me sitting beside her every time she starts the motor. In fact, just this past Saturday, as she was heading home from work, her boat stalled out on the lake. My dad spotted her from shore, climbed into a kayak—which, as someone who's about to turn eighty, isn't quite as easy as it used to be—and paddled out to her. He towed her all the way back to the dock.
I happened to walk down just as they were coming in. And I was incredibly grateful to know there was another adult I trust looking out for her.
Parenting is a gradual process of giving our children more independence while still putting thoughtful guardrails in place. To me, that's exactly what a trust is.
I hope that Jeremy and I will be around for decades to watch April drive that little purple boat, cash many more paychecks, and make plenty of big life decisions. But if life doesn't go according to plan, we've done our best to make sure she won't have to navigate those decisions completely alone.
Thanks for listening today.
This is Death Readiness, real, messy and yours to own. I’m Jill Mastroianni and I’m here to help you sort through it, especially when you don’t know where to start.
Hi, I'm April, Jill's daughter. Thanks for listening to The Death Readiness Podcast. While my mom is an attorney, she’s not your attorney. The Death Readiness Podcast is for educational and entertainment purposes only. It does not provide legal advice. For legal guidance tailored to your unique situation, consult with a licensed attorney in your state. To learn more about the services my mom offers, visit DeathReadiness.com.
