The 365 Year Old Trust

The 365 Year Old Trust 

By Alan G. Orlowsky

Lets Talk About........How would you like to be the beneficiary of a trust that was created 365 years ago?

No, this is not one of those Liberian email scams. But it is the law in at least one state in the US, where more and more trusts are being allowed to stay in existence for many years. More and more clients are asking how they can keep assets in trust that will provide help to many generations of the family (grandchildren, great-grandchildren, etc.) Some will want to have one trust that benefits their children and a separate trust for future generations. The motivations for creating these long term trusts are many. 

Education - Trusts can be created to help future family generations fund many different types of education. Payment for college is common, both private and public. But payments can also be designed for private primary and secondary school, even kindergarten and pre-schools. Allowance can be made for those who do not want a traditional academic career. For example, money can be provided for beneficiaries who want to be hairdressers, computer technicians, machinery operators, truck drivers and more.

Rules can be put in place that limit the type of schooling permitted. Trusts can allow payments of tuition only for colleges with a “liberal” reputation, payments for colleges with a “conservative” orientation, as well as distributions to support home schooling.

Money from a trust can be paid out as a distribution or it can be designed as a loan, such that the loan has to be paid back over time in order to replenish the trust for future generations. Of course provisions can be included to forgive the loans for outstanding scholarly performance if that is desired.

Health Care - Health care may be the number one issue in the news today and with good reason. The only certainty about this area is that costs continue to increase. 

Trust provisions can be drafted to provide supplemental medical payments for beneficiaries in need. You can design whether such payments are for medically necessary treatments or for optional procedures.

Housing - Trust language can be created to help trust beneficiaries buy their first (or second or third) home. It is possible that the trust could be the owner of the home and could later sell it if it is no longer needed by the beneficiary, again so as to replenish the trust for future generations.

Volunteering - A very interesting trust idea is to have trust distributions designed to encourage volunteering. For example, a grantor may have spent much of their vacation time in third world countries helping to develop and build systems that deliver fresh drinking water. They may want to make it possible for other family members to make similar contributions, and could encourage trust distributions to make that level of volunteerism possible.

Stay at home parenting - A parent may want to encourage future generations to have a stay at home parent. They may have felt that having a parent at home was a key to their children’s success. Knowing how difficult financially it can be to make that decision, the parents could decide to encourage the trustee to make distributions to beneficiaries with children who want to forego working outside the home in order to be with their children.

Business Creation - Possibly one of the most powerful economic uses of trust funding over long periods of time can be providing entrepreneur beneficiaries with access to capital. Funding startups or providing growth capital for expanding businesses can be one way to boost the productivity of future generations and also a way to multiply assets in the trust. Possibilities include loans to beneficiaries or equity investment in businesses created by beneficiaries. Of course there is always a risk of loss in such investing, so it would be prudent to limit how much of this type of investing the trust is permitted to do.

These are just some of the ideas that people have used when thinking about the future of their family. 

So while you may not be the beneficiary of a trust created 365 years ago, it’s not too late to create a trust for your own future generations. Who knows, maybe one day a whole host of great-great-great-great-grandchildren will look back with intense thanks for your thoughtfulness.

If you have questions regarding Trusts please contact Orlowsky & Wilson at 847-325-5559 or visit our website www.orlowskywilson.com for more information.