Sharing wealth too freely with your children, or attaching "hard and fast" rules to accessing your wealth, may have an unintended negative impact on their motivation to work hard and forge their own paths in life. Implementing a comprehensive wealth plan with constructive guidance for how beneficiaries can put their wealth to work will not only help to educate them on investing but will also instill in them the curiosity to explore entrepreneurial endeavors and career opportunities.
Fear of facilitating failure often results in estate plans designed to protect beneficiaries from the potential consequences of their own decision-making. Oftentimes, grantors may delay or avoid fundamental conversations about wealth and tie trust distributions to the beneficiary’s earned income or other desired behaviors.
As a result, wealthy children may grow into adulthood relying on a family office or trustee to handle many of the financial aspects of their lives — missing out on opportunities to learn about investing and, on a practical level, seeing how bills are paid and tax returns are filed.
As an alternative to traditional estate planning, which often shields beneficiaries from these learning opportunities, you can choose to establish a different type of trust — an "entrepreneur's trust" — that can empower and inspire the next generation to become responsible and engaged stewards of your family's wealth and business holdings. These trusts provide opportunities for trust beneficiaries to try their hands at investing in new private business ventures, practice their entrepreneurial skills and learn from their successes, as well as their failures, under the guidance of a professional trustee.
Rather than viewing trusts as a mechanism to protect beneficiaries from the dangers of wealth, what if trusts were viewed as vehicles to "ignite a fire" with the next generation? Download our full paper to learn how to build a trust that cultivates a spirit of entrepreneurialism.