quips, “When you have money in your pocket, you're smart, you're handsome – and you sing well, too.” In contrast, wise trustees do not fall prey to that temptation. They spend time and money to get the best advice that they can, whether around investments, law, taxes, communication, or human relations.
As Hartley and Jay have said, most trusts are proposed as expert solutions to the problem of minimizing gift, estate, or income taxes. In other words, most trusts aim at a quantitative goal. But if the trust exists for any period of time – and particularly if it does succeed at its quantitative goal – it will have an immense qualitative effect on the lives of the grantor and beneficiaries. This qualitative side of the trust is almost never discussed at its inception and often receives little attention during the trust's life.
As a result, it often falls to the enlightened trustee or adviser to be aware of and to foster the qualitative aspects in a positive direction. To do this work, it can help to begin by recognizing that the true capital placed in trust includes the human, social, and intellectual – as well as financial – capitals embedded in the trust relationship. This recognition then leads to asking, “Will this distribution help the beneficiary add to his or her growth or experience in life, his or her human capital? Will it help the beneficiary connect with others in a meaningful way, thereby increasing his or her social capital? Will it add to the beneficiary's knowledge or skills, his or her intellectual capital?” This orientation to human capital is what we hope to achieve in Part One of this book. We then take that orientation squarely into the distributive function of trusts in Part Four.
Trustworthiness is more than not doing harm. It rests on solidity of character, on standing by your word, on “ringing true” when tested. That is fidelity, the core virtue of a trustee.
Although a servant may be faithful, fidelity is not servitude. An agent serves. But a trustee is a principal, not an agent. If you have asked someone to serve as trustee merely to do your bidding, then you are not really looking for a trustee; you are looking for an agent. The same goes if you are a beneficiary who thinks that your wish should be the trustee's command.
Trustees owe their fidelity not only to the trust creator or to the beneficiary or to themselves but to the trust – that is, the trust relationship. This is a crucial point. Sometimes trustees will say that they owe their fidelity to the trust document: “I will do only what's permitted within the four corners of the document.” The document is no doubt of great importance. But it is of importance because it has an impact on the lives of people.
Fidelity is not an easy path. Often, the more comfortable route is to become the agent of the trust creator or a beneficiary. Fidelity means recognizing and resisting these temptations. One way that I think of fidelity is that my role, as trustee, is not just to speak for the trust creator or just to listen to the beneficiary (though both of those activities are very important) but, above all, to keep alive the spirit of the gift. I owe my fidelity to the gift and the relationships it creates rather than only to the giver or only to the recipient.
What I mean by “the spirit of the gift” is a topic that goes beyond the confines of this introduction. My co-authors and I discuss it much more fully in our Cycle of the Gift: Family Wealth and Wisdom (New York: Bloomberg, 2013). Put simply, every true gift contains much more than the material “stuff” that is transferred. It contains spirit. Sometimes that spirit expresses expectations around work or education; sometimes it has to do with a vision of entrepreneurship; sometimes it concerns family life and relationships. The spirit of the gift may be expressed, in words or in writings, or it may be unspoken but felt. In any case, it holds great power for the giver and the recipient. As the Roman philosopher Seneca wrote 2,000 years ago, “As a gift is given, so shall it be received.” If there is no spirit in a gift, then we call it a “transfer,” and in such cases it is not surprising if the recipient finds the gift to be a lifeless or even life-draining force. Most of the gifts that lead to the “horror stories” told about “trust fund babies” are not gifts with spirit; they are transfers.
A trustee's fidelity expresses itself in its highest form in identifying, fostering, and keeping alive the spirit of the gift. There are various ways of doing so. It may mean helping the trust creator write down or record his or her wishes for the trust. It may mean trying to piece together those wishes, values, or philosophy after the grantor has passed away, in the form of a “preamble,” as we discuss in Chapter 10. It may mean finding ways regularly to remind the beneficiaries of those values through individual or family meetings. It may also mean listening to the beneficiaries and working with them to figure out how to integrate the spirit of the gift meaningfully into their own lives. It is all the more important to take these steps if a trustee finds him- or herself entrusted with spiritless trusts – that is, trusts that embody transfers, set up solely with a view toward tax savings.
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