With the huge increase in personal net worth together with a higher awareness of prudent financial planning, more and mo families are creating and funding trusts for the benefit of their children and grandchildren.
While this makes a great deal of sense from the standpoint of financial security of the beneficiary and protection against immature decisions and even lawsuits, it also has the potential of dampening the beneficiary’s drive to succeed and could even encourage the beneficiary to incur debt, knowing the trust will pay it.
A beneficiary’s knowledge, for example, that at age 21 or 25 she will have access to her $1 million trust fund tak away the pressure to remain gainfully employed or excel in school and instead could encourage a career in surfin
In a real life illustration of such concern, a British (Jersey) court recently approved a request not to tell a 19year beneficiary that he would soon have access to a trust containing almost $100 million.
Read article here.
Learn more about trusts and divorce here:
Inheritances, Gifts, and Trust Interests in Divorce (by Jonathan Fields)
Revoking the Irrevocable Trust Part I (by Jonathan Fields)
Revoking the Irrevocable Trust Part II (by Jonathan Fields)