Living Trust vs Will in 2026: 7 Mistakes Divorced Parents Make When Protecting Their Kids' Future

Look, divorce is tough enough without worrying about what happens to your kids if something happens to you. But here's the hard truth: most divorced parents think they've got their estate planning handled when they really don't. They've got a will tucked away somewhere, maybe updated the beneficiaries on their life insurance (maybe), and they're calling it good.

That's not good enough. Not even close.

If you're a divorced parent, your estate planning needs are completely different from when you were married. Different family dynamics, different financial responsibilities, and way more potential for things to go sideways if you don't plan right. Today, we're breaking down the seven biggest mistakes divorced parents make when choosing between a living trust vs will, and more importantly, how to fix them before it's too late.

The Foundation: What's the Real Difference?

Before we dive into the mistakes, let's clear something up. A lot of folks think it's living trust or will. That's mistake zero. Most divorced parents actually need both.

A Will:

• Names guardians for your minor kids (this is HUGE, trusts can't do this)

• Goes through probate court (which means time, money, and public records)

• Costs less upfront (around $500–$1,500)

• Takes effect only after you die

A Living Trust:

• Avoids probate entirely (your kids get access in days or weeks, not months)

• Keeps everything private (no public court records)

• Works if you become incapacitated (not just when you die)

• Costs more upfront ($2,500–$4,500) but saves time and headaches later

• Controls how and when your kids get money

The smart play? A living trust for your assets plus a "pour-over will" that catches anything you missed and names guardians. That's the foundation. Now let's talk about where divorced parents mess this up.

Mistake #1: Forgetting to Update Beneficiaries After the Divorce

This one's so common it's almost cliché, but it happens every single day. You get divorced, life gets busy, and you never update the beneficiary forms on your life insurance, 401(k), or IRA. Guess what? Those beneficiary designations override whatever your will or trust says.

That means if your ex is still listed as the beneficiary on your $500,000 life insurance policy, they're getting that money, even if your will says it should go to your kids. Even if you've been remarried for ten years. The beneficiary form wins every time.

The fix: Pull out every single financial account, life insurance policy, and retirement plan you have. Check the beneficiaries. Update them. Make it your kids' trust or your new spouse if that's the plan. Do it today, not next week.

Mistake #2: Not Naming a Guardian (Or Naming the Wrong One)

Here's something most people don't know: only a will lets you name a guardian for your minor children. A living trust can't do this. If you don't have a will with a guardian designation and something happens to you, a judge decides who raises your kids. Not you. A judge.

And here's the kicker, if your ex is still in the picture, they'll likely get custody automatically. But what if they're not fit? What if there are substance abuse issues, financial instability, or they live three states away? Without a guardian designation in your will, you've got no say.

The fix: Name a primary guardian and at least two backup guardians in your will. Have honest conversations with these people before you name them. Make sure they're willing and able. And if your ex is in the picture, talk to an attorney about how to structure this to protect your kids' best interests.

Mistake #3: Failing to Fund the Trust

Setting up a living trust is step one. Actually funding it is step two, and that's where a lot of people drop the ball. "Funding" a trust means transferring ownership of your assets (house, bank accounts, investment accounts) into the trust's name.

If you die and your house is still titled in your name, not the trust's name, it goes through probate. Same with any bank accounts, rental properties, or brokerage accounts. All that time and money you spent setting up the trust? Wasted.

The fix: Work with your financial advisor or attorney to retitle your assets into your trust. Yes, it's paperwork. Yes, it's boring. But it's the difference between your kids getting quick access to what you've built versus waiting months in probate court while lawyers rack up fees.

Mistake #4: Assuming Your Ex Will "Do the Right Thing" With the Money

Let's keep it real. Maybe you've got a great co-parenting relationship with your ex. Maybe you don't. Either way, assuming they'll manage a large inheritance for your kids the way you would is a gamble most parents shouldn't take.

Even with the best intentions, money can disappear fast. New spouses get involved. Financial priorities shift. Bills pile up. Before you know it, the $200,000 life insurance payout you left for your kids' college is gone, and there's no way to get it back.

The fix: Set up a trust with a neutral third-party trustee: someone who's financially savvy and has your kids' best interests at heart (a sibling, close friend, or professional trustee). The trust controls when and how the money gets distributed. College tuition? Covered. Down payment on a house? Sure. Blowing it all on a boat? Not happening.

Mistake #5: Not Having a Pour-Over Will Alongside Your Trust

A living trust is great for the assets you've moved into it. But what about that vintage motorcycle you forgot about? The settlement check that arrives after you die? The random bank account you opened years ago?

That's where a pour-over will comes in. It's a safety net that says, "Anything I own that's not already in my trust goes into my trust when I die." Without it, those assets go through probate anyway.

The fix: When you set up your living trust, make sure your attorney includes a pour-over will. It's standard practice, but you'd be surprised how many people skip this step.

Mistake #6: Leaving Assets Titled in Joint Names With Your Ex

This one's messier than it sounds. Maybe you still co-own the house. Maybe there's a joint savings account "for the kids." If one of you dies, the other automatically gets full ownership of that asset: even if your estate plan says otherwise.

This can create serious conflicts. Your new spouse might expect to inherit your half of the house. Your kids might need that money for college. But if it's joint with your ex, they control it.

The fix: Separate everything. Refinance the house, close joint accounts, and make sure every asset is titled clearly. If you need to keep something joint for practical reasons (like a kid's 529 plan), talk to an attorney about structuring it right.

Mistake #7: Not Planning for Incapacity or Special Needs

Most people think estate planning is just about what happens when you die. But what if you're in a coma for six months? What if your child has special needs and requires lifelong care? A basic will doesn't address this. Even some living trusts miss it.

If you become incapacitated and your assets aren't in a trust with clear instructions, your ex might end up with control: even if that's the last thing you want. And if your child has special needs, leaving them a lump sum inheritance could disqualify them from critical government benefits like Medicaid or SSI.

The fix: Make sure your living trust includes incapacity planning: who manages your assets if you can't, and how decisions get made. If you have a child with special needs, set up a Special Needs Trust (SNT) so they get financial support without losing benefits.

The Bottom Line: Protection Is a Strategy, Not a Document

Look, nobody wants to think about worst-case scenarios. But if you're a divorced parent, you owe it to your kids to get this right. A will alone isn't enough. A trust without a will is incomplete. And assuming everything will "work itself out" is a plan for disaster.

The good news? Once you get this handled, you can breathe easier. You'll know your kids are protected, your wishes are clear, and your ex doesn't have more control than they should.

This is exactly the kind of holistic financial planning we focus on at My Business Is Your Business/All Into Life. We don't just look at one piece of the puzzle: we look at the whole picture. How your estate plan fits with your life insurance, your debt strategy, your retirement planning, and your legacy. Because when everything works together, you're not just protecting your kids: you're empowering them.

Next step: If you're a divorced parent and you haven't updated your estate plan in the last two years (or ever), it's time. Book a strategy call, bring your paperwork, and let's make sure your kids' future is locked down: no matter what. You can learn more about our approach at mybusinessisyourbusiness.info.

Your kids deserve better than hope and good intentions. Give them a plan.