Leaving an income stream, a bequest, or both to young family members is a perilous endeavor. Just for fun google “trust horror stories” and you’ll be amazed at what you find. Disturbingly, up pops other search terms including living trust horror stories, family trust horror stories, and blind trust horror stories. Although clearly the results described in these stories aren’t what the decedent intended, they do make for fascinating reading.
I was reminded about the problem of trusts gone wrong when I heard a story about a young woman who berated her trustee because her check was one day late. The young woman was left an income stream with the intention that it would help pay for her education, but she dropped out of school and was living on the small monthly distribution. She called her trustee because she had spent the weekend gambling and wrote checks that were going to bounce if she did not get her distribution.
I know several terrific estate planning attorneys in Reno who agonize over these situations; despite their good advice to clients, and careful planning with clients who do take their advice, the results with the next generation or two is not what was envisioned. From a layman’s perspective, it seems to me that most of the bad stories have to do with a relatively young person receiving a significant lump sum or income stream. Although it’s a generalization, many people who receive such support at a younger age seem to lose their drive to achieve things on their own.
I hope this does not sound self-serving, but at the Foundation we work with many people of a younger age on philanthropic endeavors that may be “funded” by someone older. They may volunteer, help with a community project, or participate on a grant or scholarship committee. We have a terrific High School Giving Circle program where high school students learn about philanthropy and recommend $10,000 in community grants. A generous and wise donor in our community underwrites this program and provides the $10,000 to be granted each year.
Planning always has pitfalls, but each of us does need to think about how we can teach the next generation the importance of a strong worth ethic, good family and community values, and hopefully instill a desire to help others. A good plan is not a document you create and then file away in a drawer. A working plan has implementation stages that start today and milestones for evaluation along the way. You can read more about “Spendthrift Trusts” here.
Consider leaving your heirs more than a bequest or an income stream… help them build a meaningful life. If you or a client would like to have a confidential chat over a cup of coffee to talk about plans and ideas, please give me a call.At the Community Foundation of Western Nevada, we connect people who care with causes that matter–and a whole lot more.
Chris Askin, President & CEO