The way most attorneys set up a living trust can destroy the family. Wouldn’t you rather establish a living trust that empowers your children rather than entitles them?
As a financial strategist, I’ve helped thousands of clients prepare for a brighter future with strategies that can deliver liquidity, safety, predictable rates of return, and tax advantages (click here to read more about the IUL LASER Fund).
As a proponent of all 3 Dimensionals of Authentic Wealth, I’ve also helped families approach living trusts in a holistic, responsible way. To explain, let’s start with what’s wrong with the traditional approach.
Often when you meet with attorneys, they’ll talk for 10 or 15 minutes, using financial and estate planning jargon. They tend to emphasize a single approach, asking, “Now, you want to be fair don’t you? You want to divide all this up equally, don’t you?” And as soon as you start nodding up and down, their job just got a whole lot easier.
Now all they have to do is put your assets in a trust, take down your kids’ names, and when you die, your trust will be divided up equally. They can essentially use a boilerplate trust document, and their work is done.
I have found that regardless of its complexity, traditional financial planning and estate planning has become a process of what I call the Four Ds:
- Divide
- Defer
- Distribute
- Dissipate
This approach tempts your children to look ahead to the bounty that’s coming when you pass away, and it can de-incentivize them to achieve abundance in their own lives (especially if they’re already getting treated to annual gifts from you now).
It’s easy for them to think (even subconsciously), “I’m just going to sit back, do less with my career, spend all my own money now, and maybe even quit my job.” This approach discourages saving money, encourages extraordinary consumption, and it takes families from, “We (together we’re better) to me (when do I get my share?).”
When you pass away, the money gets dumped (distributed) to ill-prepared heirs. Then what happens? It all-too-often dissipates. When wealth is transferred through a traditional trust without a system that fosters responsibility and accountability, the money often eventually runs out. Kids often use inherited wealth as a battery, rather than a generator.
Abraham Lincoln said, “The worst thing you can do for those you love is the things they can do for themselves.”
And Robert Frost said, “Every affluent father wishes he knew how to give his sons the hardships that made him rich.”
The challenge is, it’s a natural instinct for parents–we don’t want to see our kids suffer. However, in our effort to help them, we actually hinder them.
I’ve heard far too many times from very affluent people that the secret to their success was that they were raised after the Great Depression, and their parents taught them the value of work. Then these same folks turn around and proudly declare their own children won’t have to sacrifice and work like they did.
Two or three decades later, we’d meet again and I’d ask about their adult children, and the response would be, “Doug, I don’t know what’s wrong with my kids. They don’t even know how to work.”
The heartache is, they stole that from them; in their effort to help their children, they took away the very thing that could make them successful. What’s the solution?
You have to abolish that entitlement mentality.
This is why I talk about setting up trusts with equal opportunities rather than equal distribution (because there’s nothing more unequal than the equal distribution to unequals).
With an equal opportunity approach, it’s an entirely different system:
- Preservation
- Protection
- Perpetuation
- Prosperity
The whole secret here is to really live your values and make sure that your beliefs, your core values, your vision, and your principles pass on for generations–because that’s more important than just dumping money in your posterity’s lap.
And it starts now, not just when you pass away. For example, let’s say your children want help buying a home. Make sure they have skin in the game. You can draw up an agreement where for every dollar they save towards the purchase of a home, you’ll match it dollar-for-dollar.
Or if you lend them money for something (house, car, business venture, etc.), make sure they write a contract with a schedule for paying you back. And if they run into unexpected hardship and can’t pay the debt with cash, have them work around your house, or paint, fix or maintain other property you have, so they can “pay” off the loan while maintaining accountability.
One of the best ways to set up a living trust is to have a document, a kind of ethical will. (Because I assure you if you have a traditional trust, your kids will never read that document, except maybe the one page that says how much they get.)
With this approach, you want to establish a record of the values that matter to your family, something that emphasizes the idea that “together we’re better.” This way, your vision can live on long after your children are young. There’s a false belief your leadership role ends when your children are out of the nest. Instead, it’s like throwing a rock in a pond: Your impact can ripple for generations.
You want to leave behind more than money. You want to build a true legacy. In my book, “Entitlement Abolition”, I explain more about how to establish your living trust. And it starts with a holistic approach–creating your family’s Legacy Bank, a virtual exchange place for your family, where everyone from grandparents and parents to children and grandchildren can:
- “Deposit” their KASH (Knowledge, Attitudes, Skills and Habits)
- Make “withdrawals,” borrowing from others’ experiences to turn long learning curves into “power curves” and build on generational momentum
- Define and refine a family Values & Vision Statement
- Create clear rules of governance for contributing to, borrowing from, repaying, and compounding the family’s KASH and cash (now and in future generations)
Establishing your family’s Legacy Bank is one of the first and most important strategies for the development and perpetuation of the Legacy Dimensions (Intellectual and Foundational). And it can help you create a living trust so you can do more than entitle your children–you can elevate and empower them.
WANT TO LEARN MORE?
Watch the Video – Watch the related YouTube video to see me explain “What Is The Best Way To Set Up A Living Trust?” (and while you’re there, be sure to subscribe to my YouTube channel so you don’t miss a thing!).
Learn How to Take Your Family from “Me to We”: With the Entitlement Abolition strategies, you’ll discover: how to harness the power of 3 Dimensions of Authentic Wealth; how to make deposits and withdrawals in your family’s Legacy Bank; and how to rethink your thinking—and how to help your children do the same. Learn how to transform your family’s legacy—just pay for shipping and handling, and we’ll send you the book free. Order your copy of “Entitlement Abolition” here: www.EntitlementAbolitionBook.com.
Join a Webinar – Want to find out if an IUL LASER Fund (a properly structured, maximum-funded Indexed Universal Life insurance policy) is right for you? Join us for an upcoming webinar where you can explore these strategies.
