On Wall Street

[Community Manager]

Are incentive trusts a product that you offer (or perhaps may offer soon)?

[Bradly T.]

Only attornies can offer or create trusts!!!!!!!!!!!! Are you asking if we recommend or design them???????????


Of course we do. Duh!!

[Community Manager]

I think that I was really interested in finding out how actively you market and sell these to customers. I apologize if the question was worded in a clunky fashion.

[Community Manager]

Also, check out one of our new columns by Bank Investment Consultant's Editor in Chief Pam Black on working with the wealthy.

Jet Set: Will Your Estate Survive the Kids?

[Bradly T.]

Apologies for being flip.....however, we still don't SELL trusts. We design them...attornies "sell" them. Every estate planning discussion includes the need for trusts, the types of trusts, and the language. There are many types of trust to consider for each situation and desired outcome....no cookie cutter solutions. Generally there are two broad types - retention and liquidation. One holds assets for years or decades, one pays out all proceeds after grantor's death. An estate may use both types for different beneficiaries based on their situation. Most discussions include a grantor's concerns about spendthrifts, or divorce, or professional/personal liability, or future estate taxation of heirs, etc.


Incentive trusts are common for the wealthier clients who have a desire to use inheritance as a motivation for behavior. Their restrictive trustee language makes them difficult and dangerous.

[Bradly T.]

As the article points out, unearned wealth (windfalls) regardless of their source and including inherited wealth, seldom has good results or outcomes for the recipient. Even some forms of earned wealth - witness Hollywood celebs and professional athletes who often go from poverty or working class to grand wealth quickly - have similarly bad outcomes.


But "management from the grave" has serious problems, usually left for trustees, beneficiaries, their attornies, and the courts to work out with plenty of acrimony and expense to go around. There must be provisions for the failure of the beneficiary to meet the incentives - then what? You have family self dealing issues for blood trustees. It can become messy. I believe it was John O. on a similar thread here who stated that many of his wealthier clients are actually setting up foundations and other charitable distribution trusts for the majority of estate assets, providing health, education, and income support inheritances for children and grandchildren. I have read that some wealthy insert family members onto the boards of family foundations to instill both responsibility and generousity (service) as a profession and income option.



But let's be clear here, this issue does not exist for 98%+ of Americans. Even those with sufficient wealth to last several generations rarely use specific incentive devices for trust beneficiaries. Financial planners should be aware of their availability and discuss both retention and distribution strategies....but it is attornies (and hopefully very skilled ones) who draft the documents and insert the language for all trusts. Why do you keep asking if we market and sell them...how long you been in this business??????