Getting on and staying on the path to success is something many parents want to be able to help their kids with, both while they are alive and after they are gone. So, putting their kids in a good position to succeed is one of the things a parent may have among the main goals for their estate plan.
When one thinks of what a person can leave to their kids through an estate plan, their mind might go straight to money and assets. Now, what resources a person has access can have impacts on what sort of position they are in to succeed. However, access to money and assets does not automatically equal success. In fact, parents may have concerns that just giving money and assets to their kids with no strings attached might actually impair rather than promote their kids’ ability to succeed, by perhaps causing their kids to be more likely to be spoiled, feel entitled or feel like they don’t have to work hard or strive for anything.
It is not only the resources a person has access to that can impact how likely they are to be able to succeed, but also things like the values they have and what they use the resources they do have access to for. So, parents may be happy to know that money and assets are not the only things they can pass onto their kids in an estate plan. Another thing estate planning devices can be used for is trying to pass certain values, such as financial values, onto the kids. For example, trusts can sometimes help with this goal.
One way a parent can try to convey certain important lessons and values to their children though a trust is spelling out these lessons and values in the trust document. Parents can do this through a statement of purpose.
Of course, talking about values is not the only value-related thing a parent can do in a trust. They can also use the trust’s structure to try help point their kids to the values they feel will help them to succeed. We will dive deeper into this use of trusts in the upcoming part 2 of this post.
Source: Forbes, “The Successful Entrepreneur's Guide to Leaving a Financial Legacy That Won't Spoil Your Kids,” Garrett Gunderson, June 24, 2016