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Legacies & How Trusts Can Help

By: Emens Wolper Jacobs & Jasin Law Firm, Heidi R. Kemp

In my line of work, I often hear people say “I want to leave a legacy.” A legacy of what? It means different things to different people. Personally, I value experiences over tangible items. I’ve always tried to create memories and experiences for my nieces and nephew. That’s how I want them to remember me. Recently, my nephew and his friend wanted me to take them on a hike because I make it “funner.”

Naturally, I was all for it. The boys were on a pretend hunting trip and the hike went great. After, we realized that the boys no longer had a hunting knife they had brought along as a prop. Unbeknownst to me, it turns out the hunting knife was my brother-in-law’s grandfather’s knife and my nephew had taken it without permission. We searched the woods for over an hour trying to find it. But, it was a proverbial needle in a haystack since the sheath was brown and the floor of the forest was covered in dead leaves. We finally had to give up. My nephew knew he was in trouble and balked at having to confess to his dad. I explained to him that he was about to learn two very important lessons: (1) don’t take something without permission and (2) own up to your mistakes and bear the consequences of your actions or decisions.

As he left to go tell his dad, my heart broke for him. I wanted to fix it for him. I knew he was feeling just sick inside knowing his dad would be disappointed in him. But, I made myself leave it in his hands. I couldn’t bear these consequences for him and I knew I shouldn’t. He needed to learn these lessons the hard way so they would stick with him. In the end, we ended up finding the knife (thank goodness) but hopefully, my nephew will not forget what he learned that day.

As parents and grandparents, I know there’s a real desire to give your children or grandchildren everything or to make it easier on them than you had it. As the story above relates, I get it. Completely. But, sometimes making it too simple for them actually costs them the life lessons they need to succeed in life. This is often where a trust can bridge those ideas. The child or grandchildren can benefit from the trust but they cannot have the money for just anything. As the creator of the trust, you get to dictate what types of things the trustee (person in charge of the trust) can pay for from the trust. Things like education, healthcare, support – or even a car, travel, wedding, or to start a business.

But, the really great thing about trusts is that you can customize it to your situation. If you want the beneficiary to have some “skin in the game” as they say, the trust distributions can be tied to the beneficiary’s income to ensure he or she is working. Or, the trust document can state that a distribution for a down payment on a house can be made but only to match the down payment made by the beneficiary. By doing this, the trust can in effect help “parent” or teach the beneficiary some of the same lessons you would want to teach them if you were around.

Warren Buffet once said that he wanted to leave his children enough money so that they would feel they could do anything – but not so much that they could do nothing. Now, most people do not have the same type of wealth that Warren Buffet has. But regardless of your wealth, the sentiment of that statement may ring true. Again, what kind of legacy do you want to leave?