Why a Trust? I remember the first client who asked me that question. I wish I could have shared this excellent piece by my dear friend and teacher, Timothy J. Belber. With Tim's permission we are posting this piece which was originally posted on Thoughts & Commentary.
The “Someones” and “Somethings” of Multi-Generational Trusts
by Timothy J. Belber, JD on April 20, 2011
With all the litigation around trusts, beneficiaries and trustees, the question of why bother with one in the first place surfaces loudly. Certainly, there are very smart tax and asset protection reasons for trusts. The unhappiness (read: litigation) is generally not about those things. It goes to a much deeper issue -- the human component.
Ever since the first crusader “entrusted” his bishop with his assets, trusts have centered on a very straightforward idea:
One person (the grantor) gives a second person (the trustee) something to hold for the benefit of a third person (the beneficiary).
Too often the focus is on the “something” rather than the “someones”.
We see the opportunity to act differently arising at the very first design meeting. It begins and ends with a new set of questions to be considered by the grantor and the advisors:
• How would you want to be treated if you were a beneficiary of this trust?
• What do you want the coming generations of beneficiaries to say about you and this trust?
• What are the key values and principles that you believe are critical to success in life?
Questions like these can then be translated into a document that could:
• Begin with a simple statement of purpose or faith;
• Be written in the first person;
• Sound like the voice of the grantor.
Consider this opening language from an actual multi-generational trust:
While from a legal and tax standpoint this Trust must be construed from the perspective that I am the sole “grantor,” my children and their future descendants and families should know that its creation was very much a collaboration of the mutual philosophies and ideals of my wife and partner, and myself. We have deliberated carefully on the purposes we would want this Trust to fulfill. Whether this instrument uses the singular “I” or the plural “we” when it speaks of goals, objectives or intent, I want my children and descendants to know that those expressions echo the thoughts and desires of both my wife and me.
The Trust does not exist as an end unto itself. It is merely the means by which we have chosen to share some of our wealth with our children, and eventually our future descendants. It is a framework to help our family better govern itself, and to encourage our children and their descendants to strive to be the best individuals they can be and to seek joy by living in accordance with the values expressed in this Agreement. We hope that this Trust will remind our children to discover the personal growth and satisfaction that can be realized through sharing our good fortune with those who are less fortunate. We also hope the Trustee will offer positive encouragement and assistance to each beneficiary in their quests, crises and challenges.
Perhaps more about the “someones” and less about the “somethings” in the trust equation would lead to better results.
What do you think?
Timothy J. Belber, JD
Director, Family Wealth Services
The Madison Group