Here is another "Greatest Hits" from a blog posted in November of 2011. Still very timely.
It doesn’t take an experienced estate planner to recognize the basic truth behind the oft misquoted saying “the love of money is the root of all evil.” It is important to remember that money itself is not good or evil. The virtue or vice comes from how we allow money to affect our actions and interactions. The term “Trust Fund Kid” has come to describe a spoiled young adult living an idle life on money they did not earn. This of course is not true for all those who live under a trust fund. Warren Buffett’s son Peter is a good example. He has even written an article imploring wealthy parents not to spoil their children. An experienced estate planner can help your loved ones lean to the positive when it comes to the inheritance you leave them.
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.
Performance Based Rewards. 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.
It’s All in theTiming. 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.
It is important to remember that these ideas and the wisdom they include accomplish nothing without action on your part.
The issues surrounding how to create the trust are worth mulling over, but just as important is the planning that goes into creating the trust and the correct timing to maximize its value. You can make good use of this timing given the present generous state of our estate and gift tax law, along with the currently depressed asset values.
Again, whether it’s thinking about the funds to put in the trust or the future of the inheritor, there’s no time like the present! Contact us today and schedule a consultation and estate plan analysis. Remember, good planning is no accident.