In part one of this post, we discussed how values can be among the things a person wants to pass onto their children after their death, and mentioned that estate planning can be aimed towards this goal. Today, we will discuss how, when a person has a trust in their estate plan, the trust's structure can have impacts on what values the trust promotes.
In a trust, generally, property placed in the trust is managed by the trustee, with the trust distributing benefits to the named beneficiaries. A trust can contain terms specifying when distributions are, and are not, to be made.
Among the things trust benefit distribution terms can be used to do are encourage certain behaviors by beneficiaries (by conditioning benefits on certain actions) and discourage certain beneficiary behaviors (through making certain behaviors a disqualifier from receiving a distribution). One could see how these carrots and sticks could be used by a parent in a trust in which they named their children as beneficiaries to try to promote certain values to their children.
So, when one of the goals a parent has for a trust is passing on values to their children, how they structure the trust, such as what benefit distribution terms they pick for the trust, can have big impacts on the trust's ability to further this goal.
Another thing that can have such impacts is the conduct of the trustee, as the trustee is the one who runs the trust and carries out its terms. So, when a person is setting up a trust aimed at value-promotion, things such as exercising care when selecting a trustee and ensuring that the trustee understands their goals for the trust can be quite important.
As this discussion underscores, while estate planning can be used to try to pass values onto one's children, the little details of how the various devices in an estate plan, like trusts, are set up can have a very big impact on how well-suited a given estate plan aimed at this goal is for actually achieving it.
Whatever goals a person has for their estate plan, they may find it advantageous to have a skilled estate planning attorney's help when it comes to estate planning device set-up (such as trust set-up).
Source: Forbes, "The Successful Entrepreneur's Guide to Leaving a Financial Legacy That Won't Spoil Your Kids," Garrett Gunderson, June 24, 2016