From my experience the very best way to design and create an effective ‘Life & Estate Plan’ is to first learn from the client what is most important to them. This process helps the qualified estate planning attorney identify the client’s unique goals, concerns, fears and expectations. We then utilize strategic planning opportunities in the clients trust to meet their goals.
When it comes to trust money, and inheritances in general, you need to find a balance that will help your children become the people you know they can be. For some solid tips, check out this article and the 5 trust fund rules to help children. The balance these rules help to create, as so aptly put by Warren Buffet, give your children “enough to do anything, but not enough to do nothing.” So, let’s review a few of the rules.
Carrots and Sticks. A trust need not just leave money; but it can be a tool. By building the appropriate provisions, you can offer certain tests and incentives to guide your heirs towards positive goals. You earned your money through hard work and, likewise, the trust can help foster similar lessons as you see fit.
Timing. The funds in a trust can be made readily available or made available over time, with or without incentive goals. After all, you might not want to lock a child into set goals (you might not know enough about which goals are appropriate for them), but you might want to keep their access to the funds at a pace consistent with their age and maturity. Generally speaking, such an approach generally is a solid bet. It can give a sense of security, without instilling laziness, too.
Money Isn’t Everything. In keeping with the above, consider using the conditions that surround the trust (i.e., your death) as an opportunity to provide your wisdom through your own letters or videotapes of success stories, so that the trust fund is opened as your words are received.
That’s only three of the five rules. For the other two, read the original article.
Regardless, the time to act is now.
There’s no better time than now to create a Trust given the present generous state of our estate and gift tax laws, along with the currently depressed asset values.
Reference: The Fiscal Times (September 20, 2011) “5 Trust Fund Rules That Can Really Help Children”
Patrick J. Kelleher is an estate planning attorney serving and protecting families and businesses in the South Shore, MA area. For more information on estate planning visit our firm’s website at www.MyFamilyLifePlan.com or if you have any questions please call Attorney Kelleher at 781-871-PLAN (7526) or by email at Pat@myfamilylifeplan.com
This article is not intended to provide legal or tax advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney. Always consult with qualified legal and/or tax counsel.