avoid the heartbreak of an estate plan gone very, very wrong.
What Can This Guide Do for You?
Until Family Trusts, no single book has offered families and their advisers field-tested ways to communicate about trusts; clarify intentions; develop excellent beneficiaries; and find, prepare, and transition excellent trustees.
This guide is for the family member who is serving or thinking of serving as trustee. Likewise, it can prove useful if you're an employee of a commercial trust company, private trust company, or family office, or a partner in a professional firm who is responsible for speaking with beneficiaries about qualitative rather than solely quantitative issues.
More broadly, this guide aims to help anyone else involved with family trusts, including (most importantly) beneficiaries as well as trust creators, trust protectors, trust committee members, and legal counsel.
We assume that you already have access to some degree of technical information along with excellent technical advisers. We won't be spending much time on taxes, the latest regulations, jurisdictional issues, and the whole host of other specialized topics that change from year to year.
What remains is the focus of the guide: the enduring work of boosting the quality of the relationships among those connected by trusts.
From Positive Stories to Action Steps
Years ago, I left the practice of law to accept a senior trust officer position. It was great to be thrust into the midst of families, especially trust creators and beneficiaries, wrestling with a kaleidoscope of dilemmas and opportunities. And what a change: suddenly I was administering trusts similar to those that I had formerly taken part in creating.
Imagine my surprise to see the reality of “bulletproof” plans being undone by the day-to-day actuality of family members interacting with me and with one another.
It was a daily effort to square the language of trust instruments with the life situation of beneficiaries. Legal skills obviously came in handy. But I was also glad for the time spent – this was before law school – on the staff of a social services agency, where I had helped people sort through challenges, some of which were full-blown crises.
Most of the correspondence I received was from beneficiaries requesting funds. The lively conversations that ensued often provided an opening for us to deepen our relationship. These distribution-related conversations were where opportunities for mentoring and thoughtful give-and-take about broader issues arose. I might ask something along the lines of: “What do you hope to accomplish by your request?” and then “Why is that important to you?” If it looked like I'd have to decline the request, we'd examine the goal and brainstorm alternate ways of achieving a good result without assistance from the trust.
Over time, my enthusiasm for trust administration faded. This change was not sudden, and no one event, family drama or internal policy shift caused me to lose hope; it was more a case of constant slippage. During a decade of administering trusts, and a second decade advising clients of a multifamily office, I saw my profession transform.
Local trust companies were swallowed up by ever-larger financial institutions. Centralized authority, standardized procedures, and short-term risk avoidance – important considerations, of course – chipped away at the traditional personal approach.
This way of administering trusts felt less and less effective and less and less satisfying. I left the institutional trust world to establish a consulting practice in 2009. If I ever doubted it, it was now emphatically clear that, because they are basic to family flourishing, successful trust relationships can't be handled like conventional “assets.” One has to zero in on the qualitative work with wholehearted purpose. Through writing, keynotes, workshops, and taking on related projects, I began translating what I had learned (and continue to learn) about flourishing trust relationships.
Over the years, I had played a part in many life-affirming stories where trusts made a lasting positive difference. These stories – counterpoints to all the nightmarish tales – stuck in my mind. In 2010, I launched the Beneficiary and Trustee Positive Story Project. At Jay's excellent suggestion, Kathy Wiseman joined the endeavor. We went to the source – beneficiaries, trustees, and their advisers —asking them for positive stories about moments in time when relationships between trustees and beneficiaries worked well.
Relationships have their ups and downs. But what interested us were stories about the up times, even when they began with a down development – stories that showed strengths and evolution, perhaps a story about overcoming a challenge.
The project led to the October 2012 publication of a collection of the positive stories in TrustWorthy—New Angles on Trusts from Beneficiaries and Trustees.1
People loved the stories, because stories allow readers to get a feel for “how other families are handling it.” Still, it's one thing to paint a picture of positive outcomes; it's quite another to help people achieve that type of outcome for themselves.
Our aim in Family Trusts is to help readers amplify their useful stories and reframe unhelpful ones. The method is to bring ideas to life through proven exercises for readers to try, questions carefully designed to stimulate new thinking, and illustrative stories that can help readers adapt this material to their own lives and practices. Together we will transform that relationship.
Everyone working with trusts recognizes the core challenge: the fear shared by parents and grandparents, How can we help our children and grandchildren flourish rather than create “trust fund babies”? This fear leads to delaying communication, secrets, and missed opportunities, and therefore fulfills itself: poorly prepared beneficiaries perform poorly.
In the face of this fear, a good trustee, an enlightened adviser, or a determined beneficiary can make all the difference.
We've seen lives transformed when both trustee and beneficiary stop viewing the trust that binds them together as a burden – and begin to view that very same trust as a resource to support the beneficiary's life purpose.
I'm a storyteller. So the best way I know to make this point is not to describe it, but to “show it” with a fable, with which I'll close this preface:
Grandma and Grandpa have accumulated financial wealth. So they make an appointment with a lawyer to create an estate plan.
In the days leading up to the appointment, nights are sleepless for Grandma and Grandpa. They are worried that their wealth will create “trust fund babies.”
The day of the appointment arrives.
When Grandma and Grandpa enter the lawyer's office, a transformation happens.
Grandma and Grandpa are no longer “Grandma and Grandpa.” They have been transformed into “clients.”
The clients leave the lawyer's office with a bulletproof estate plan that protects against taxes, creditors, spendthrifts, and bad marriages.
On the way home, they reemerge as Grandma and Grandpa. They are still worried about creating trust fund babies.
Grandson and Granddaughter love, and in turn are loved by, Grandma and Grandpa.
Grandson and Granddaughter are very sad when Grandma and Grandpa die.
The lawyer meets with Grandson and Granddaughter to explain his clients'
Goldstone and Wiseman,
