I'm not a parent, but I've worked with hundreds of them, so I know you’ve probably spent more than a few sleepless nights thinking about your kids.

Are they safe? Are they healthy? Are they making smart choices? And—if we’re being really honest—what happens to them if I’m not around to guide them anymore?

One question I hear a lot from parents at my law office here in Texas is this:

  “How do I make sure my kids don’t lose their inheritance—or blow it?”

It’s a fair concern. The truth is, even a generous inheritance can vanish fast without a good plan. Creditors, divorces, bad spending habits, and family drama can all eat away at what you’ve worked so hard to build.

But the good news? With the right estate planning strategies, you can protect your children’s inheritance—and give them the best shot at a secure future.

Let’s review the biggest financial risks, and then I’ll share how you can create a rock-solid plan to protect your legacy.

Protect your child's inheritance from financial risks

Common Ways an Inheritance Can Disappear

It’s a tough pill to swallow, but it happens all the time. Parents leave money or property behind with the best of intentions, but things don’t go as planned. Here’s where things can go sideways:

1. Creditors and Lawsuits

Let’s say your child ends up in debt, files for bankruptcy, or gets sued after a car accident. If they’ve inherited money in their own name, it’s considered an asset—and fair game for creditors or legal judgments.

And here’s something many folks don’t realize: if your child goes through a divorce, their inheritance could be dragged into the mix if it wasn’t properly protected. In some cases, an ex-spouse could walk away with half.

2. Poor Money Management

We all love our kids, but not every child is born a financial whiz. I’ve seen more than one young adult burn through a sizeable inheritance in just a few years. Fast cars, bad investments, or just plain inexperience can turn a blessing into a burden.

Sometimes, that lump sum turns into a fast track to debt, and your child ends up worse off than before.

3. Family Conflicts and Inheritance Drama

Emotions can run high in blended families or families with rocky relationships. I’ve seen otherwise decent people get into ugly fights over inheritance when things weren’t clearly spelled out.

If your plan isn’t airtight, someone may contest the will, challenge your choices, or try to twist your intentions. It’s not what any parent wants to leave behind.

4. Estate Taxes, Probate, and Legal Fees

Without proper planning, your estate may be eaten up by taxes and court costs before your kids see a dime. And, while we're lucky to be here in Texas where we don't have a state estate tax, there are still probate costs and legal fees that can shrink the pot. Not to mention the potential for federal estate taxes.

So, How Do You Protect Your Child’s Inheritance?

This is where the magic of a well-done estate plan comes in. With the right tools and structure, you can keep your legacy safe and ensure your children are set up for success.

Let’s talk through the strategies I use most with Texas families:

Set Up a Trust (It’s Not Just for the Wealthy)

One of the best tools in the estate planning toolbox is atrust.

Trusts let you control how, when, and under what circumstances your child receives their inheritance. That means:

• No lump sums they could blow in a weekend.
• Protection from creditors or divorcing spouses.
• Support for their needs without enabling bad habits.

There are a couple of types you’ll want to know about:

Revocable Living Trust

You keep control while you’re alive, and your assets avoid probate when you pass. You can make changes anytime.

Irrevocable Trust

Offers stronger protection from creditors and lawsuits—but once it’s set, you can’t change it without jumping through some hoops.

If you’re not sure which is right for you, that’s exactly what I help families figure out.

Choose a Responsible Trustee

Think carefully about who will manage the trust. It might be a trusted family member, a friend, or even a professional fiduciary (like a bank or lawyer).

The right trustee:

• Understands finances
• Will follow your wishes to the letter
• Can stay neutral during family drama
• Isn’t likely to be swayed by pressure or guilt

Don’t just default to your oldest child. Choose someone who will do right by your plan and your people.

Use Spendthrift Provisions

This is a legal clause that limits how much of the trust your child can access at one time and it blocks creditors from reaching those funds.

Think of it like a safety valve. You’re not saying your child can’t have what you left them—you’re just making sure they don’t get steamrolled by debt, bad decisions, or outside pressure.

Spendthrift clauses are especially helpful if your child is still young, struggling financially, or prone to risky behavior.

Plan for Blended Families and Complex Relationships

If you’re remarried and have children from a prior relationship, things can get complicated in a hurry. The last thing you want is for your current spouse and your children to end up at odds over your estate.

A few tools that help:

• Marital trusts to provide for your spouse while protecting your kids’ share
• Separate property agreements to define what’s yours vs. theirs
• Clear, updated documents to show exactly what your wishes are

This is one of the biggest areas I help families navigate. With the right plan, you can take care of everyone you love—and avoid a tug-of-war later.

Update Your Legal Documents and Beneficiaries

Your estate plan is only as good as its last update. I can’t tell you how many folks I’ve met who still had an ex-spouse listed as a beneficiary—and didn’t even know it.

Make sure to review and update:

• Wills
• Trusts
• Retirement account beneficiaries
• Life insurance policies
• Powers of attorney
• Healthcare directives

Any time life changes (i.e. marriage, divorce, new baby, death in the family), take a fresh look at your plan. In fact, I wrote another blog about ithere.

Why Work with a Texas Estate Planning Attorney?

You can find templates online, sure—but they don’t know your family, your assets, or Texas law.

As a local estate planning attorney, I know the ins and outs of protecting assets in this state. I’ve helped hundreds of families across Texas create personalized plans that:

• Minimize taxes and court costs
• Shield inheritances from creditors
• Avoid probate delays and disputes
• Keep peace in the family
• Honor your values and goals

At Misteli Law, we’re not just pushing papers. We’re helping you protect the people and legacy that matter most.

Real Talk: What Peace of Mind Looks Like

Let me tell you something I’ve learned from years of doing this work:

The families who plan ahead sleep better at night.

They know:

• Their kids are protected
• Their wishes are clear
• Their estate won’t be tied up in court
• Their hard work won’t be wasted

Estate planning isn’t just for the rich or the elderly. It’s for any parent who wants to leave love, not stress, behind.
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For more on Texas estate planning, and to learn about estate planning lawyer Tom Misteli and The Misteli Law Firm, visit www.mistelilaw.com.

This blog post is advertising and in no way constitutes legal advice or the formation of an attorney-client relationship.