Trust Funds Can Ruin a Child, Why Do I Want My Grandchildren to Have One?

Money, Money, Money

We in America have an innate respect for self made wealth, rags to riches stories and an inborn disdain and distrust of inherited wealth. This shows up in conversations – “What do you do?”, in criticisms “Nasty Rich B—–” and in guilt trips “You don’t deserve all that money, give some to me!”.

Yet, our collective dream is to be successful and make a lot of money! If we do that, then eventually we need to give it to someone (can’t take it with ya!).

My choice is to give it to my descendents. I want to do that in such a way that it benefits my family members for several generations.

Why Not Give It Directly To Them – No Strings Attached?
If I give the money outright to my grand kids when I die, I have no control over when they get it or how it will be invested or used.

It could steer them off course if they receive it before they have made their own way in the world. I’ve read that giving large sums to young people, especially in their late teens or early twenties – can really throw them off track. They end up losing focus and not pursuing their own goals and dreams.

They could spend it all right away, negating my desire to have it benefit multiple generations.

Since they might be novice’s at money management, they could make really bad investment choices and lose it all.

Why I Want A Trust For Them
So, I want a trust. In a trust, I can specify what each beneficiary gets and when they get it. I can make conditions – like only distributing matching amounts to earned funds. I can say what it can be used for: such as education or healthcare, etc. I can designate a trustee and give them instruction as to what they can and can’t do.

With a trust, I can give money to minor children.

Also in a trust, the funds can be allocated to different generations. The funds can be protected from lawsuits and credit claimants.

If I set up the right kind of trust, I can move money out of my own estate, to avoid death taxes.

Best of all, I can make a statement of values and ethics to help future generations carry on family traditions and legacies.

For more on trusts, see this article Estate Planning Basics III – Trusts

Do you have a trust?