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Establish a Trust to Pass Wealth and Family Values on to Your Children

Sowards Law Firm

Parents need to instill family values at an early age to ensure the adoption of these family values. Undoubtedly the best time to teach and empower your children as eventual inheritors of your family legacy is during childhood, then continuing throughout adulthood. Waiting until your later stages in life to discuss family values as a guide to handling inherited worth is often ill-received as grown adult children prefer not to feel parented anymore, particularly when they are raising children of their own.

There is value in the spiritual, intellectual, and human capital of rising generations, and it is incumbent upon older generations to embrace this notion and work with their heirs rather than dictating to them their ideas about how to facilitate better outcomes. While the directions taken by newer generations will likely differ and can sometimes be downright frightening than that of their elders, there can still be a deep sense of service and responsibility to family values and stewardship of inherited wealth. Allow your children to exert their influence over the family enterprise early on in life and make adjustments that create synergy, connection, and like-mindedness.

If this description of a somewhat ideal family system does not resemble yours, take heart. Most families do not conform to perfect standards of interaction. The more affluent a family is, the higher the failure rate to disperse assets without severe fallout. The Williams Group conducted a 20-year study and determined there is a 70 percent failure rate that includes rapid asset depletion and disintegration of family relationships during and after inheritance. Establishing inheritable trusts can provide real benefits. Benefits include avoiding probate, reducing time to handle estate matters, privacy protection, the elimination or reduction of the estate tax, and can be effective pre-nuptial planning. A parent who wants to control outcomes should focus on these benefits of the trust instead of trying to legislate their future adult children’s behavior.

It is imperative not to allow your values and legacy to become weaponized within the family system. A sure-fire way to inspire conflict is via “dead hand control,” meaning trying to control lives from the grave. Most often, if you put excessive trust restraints on adult children, they will act accordingly to your perception that they are not adult enough to handle wealth. Instead, consider enrolling them in a few classes about managing wealth. Spark an interest in them to learn how you have created wealth, the mechanisms you used, and what their future endeavors may look like long after you are gone. Formally educate your children about finances, the earlier the better, and instead of talking about who gets what the conversation can shift to the mechanics of managing wealth. This tactic resets the context of the issue and aligns purpose and intended long-term outcomes.

Estate planners try to encourage trust choices that lead to flexibility. If a beneficiary is genuinely incapable of making the right decisions, a trustee can be appointed to make distributions in the beneficiary’s best interest. This trustee discretionary power of money management can help a well-funded trust survive for generations.

You can also write a letter of wishes or provide a statement of intent to your children. Though these are not legally binding, it gives you a platform to remind them of family values and your desire for these values to be maintained for future family generations. This type of letter is an opportunity for you to convey your vision for how your wealth can bring growth and a chance for fulfillment to beneficiaries.

Prosperity should positively shape lives. Family trust beneficiaries hopefully already have a self-driven life that includes purpose, responsible behavior, and a basic understanding of personal finance. If you worry your children may squander inheritable assets, create the opportunity for them to succeed through classes that teach them about managing legacy family values and wealth. Address your concerns legally and directly through a detailed trust that can help but not overly constrain them to achieve what you envision they can become. Start an honest conversation early on, but remember it is never too late to make good choices and create positive family value influences for the coming generations. A well-known Ann Landers quote sums it up neatly, “In the final analysis it is not what you do for your children but what you have taught them to do for themselves that will make them successful human beings” – a worthy goal of any family value system.

If you are interested in establishing a trust to pass wealth on to your children, we can help. We can also guide families on how to pass on family values in a meaningful way. Please contact us today at (408) 371-6000 to schedule a free consultation to discuss your legal matters. We look forward to the opportunity to work with you.

Client Reviews

I recently had the pleasure of working with Sowards Law Firm to create my estate plan, and I couldn’t be more satisfied with the experience. My company has a legal help portal where I discovered Sowards Law Firm, and I’m so glad I chose them. From the start, the entire process was incredibly smooth...

Prashant Joshi

They made it pretty easy for us to set up the legal entity we needed. Everyone we talked to was knowledgeable, professional, and considerate. We had to work around a difficult schedule, and the folks at Sowards made it work.

John Brawn

Everyone at Sowards Law Firm was extremely kind, helpful, and professional in helping me manage all of the legal work required after my husband passed away. They explained everything clearly, and focused on what would be the best options for me in the future. I’m grateful for their assistance and...

Lyn Savage

I have been working with Sowards Law Firm for all my estate needs and their service is impeccable, with the upmost professionalism. They walk you through scenarios in detail so that you can make informed decisions. I highly recommend this team.

Debra A

They made it SO EASY! Everything was explained and explored in regards to figuring out how to organize and structure. Very thoughtful and thorough. I will definitely recommend them, and have sent all of my clients their info to get their affairs in order.

Cindy Selleos

I used Sowards for my Estate planning needs. The firm provided excellent advice, and made the process very easy to complete in an expeditious manner. Each person that I interacted with was professional, friendly and competent. I have confidence that this multi-generational law practice is a solid...

Karen Bryant

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