As Texans navigate estate complexities when formulating a plan for the future, there are numerous issues for them to take into account. This is true whether the portfolio is of significant value or it is of more modest means. People who are thinking about trusts and the distribution of assets to their heirs can take advice from those who are of substantial means and tailor a plan to suit their own goals. One example is how billionaire Warren Buffett crafted his estate and its distribution.
Mr. Buffett is one of the richest men in the world, but his perspective on how to ensure that his children do not use his own accomplishments to become lazy was to give them enough that they could be stable, but not so much that they did not want to achieve anything on their own. By providing his son money to pay off various loans and buy a reasonably priced home, he did not accord them money for no reason whatsoever. In addition, he made certain to donate a significant amount to charity and instill the value of philanthropy in his children. People who are considering their own estates might not automatically relate to Mr. Buffett, but there are foundational aspects that can be transferred to any situation.
An example of how to formulate an estate plan with the children in mind but not letting them languish is an incentive trust. This is when an heir is expected to fulfill certain obligations. It provides supporting funds that will stipulate that the heir do certain things in order to have access to it. That could mean charitable contribution, education and more. A sentry trust gives divorce protection and shields from legal filings, bankruptcy and credit issues. This will have in place requirements before the assets can be touched. A charitable trust is something that Mr. Buffett used to promote the idea of giving back. With it, a piece of the assets go in a foundation that the heirs will oversee and decide how to distribute.
These are just examples of how heirs can be compelled to perform certain acts and ways they should behave when receiving assets after the testator has died. It does not necessarily have to be copied, but it is a guideline of options that a person will have when deciding on an estate and how it will be distributed. As always, speaking to an attorney is a winning strategy to make certain that the estate administration is organized in a desired manner.
Source: Forbes, “Should You Leave All Your Money To Your Kids?,” Mark Eghrari, March 27, 2017