By: Bruce Bahlmann

There are those that believe that once they die they want to give all that they own (their inheritance) to their children in their last will and testament. Others believe that their children should , as they did, have to work for everything and that they should not be left with any fortunes of their parents. There are many other possibilities between these extremes.

I don't believe in either of these extremes. Rather I believe life is hard enough any way you cut it, and if you have money and you are no longer in the living, you should do what you can to make life better for those around you. Giving away ones wealth should not happen in one instant after death to any organization ready and willing to put it to "good use". Rather, I adhere to the notion of gradually dolling it out in such a way that it not only remains useful to those you are giving it to but all the while, the principle amount continues to grow. Think about it.

What if you had a million dollars at death (most people will if they followed any sound financial advice), and were to place that into a managed fund - the operation of which you define within your will. Such a trust might say that all the money is to be deposited within one of a select group of mutual funds or similar mutual funds which have both capital gains and dividends. The funds chosen must have no relation whatsoever to those benefiting from the proceeds. The will might say that all capital gains from the funds MUST be reinvested into the principle indefinitely. The will might say that each year the dividends will pay the fees of running the investment account first and foremost, but after that, all remaining funds will be distributed in percentages to the things deemed most important by "you". A honorable goal may include:

• The principle will never represent an asset of any descendant nor could it ever be obtained by lawsuit or other means - it is entirely a separate entity with no hard ties to any descendents.
• The sole purpose of the funds increasing proceeds is to attempt to make the lives of your descendants better, give them less to worry about, give them the tools they need to make it in life and or get a leg up. The key is not to pay descendants money outright to do with what ever they please. Rather, the funds will be used indirectly to pay for things that make their life a little easier, allowing them to spend a higher percentage of their hard earned money on things they like to do that makes them happy. As such you might consider covering such things as:
  • Contribute to the funding of education for all your descendants including college, advanced degrees, and private schools - in that order (emphasize that ONLY tuition will be paid).
  • Contribute to the funding of whole life insurance policies on all your descendants such that they will never have to pay for such a benefit so long as the cash value of such policies are not touched till some retirement age (65). If excess funds are available, pay for any other health related insurance needs including health, dental, or supplemental health.
• The funds need to survive your direct descendants even in the event that something wipes them all out. In which case it needs to get creative in helping other blood relatives or other branches of the family tree first and foremost. It is within your abilities that such funds make having your last name mean something as it carries with it a fortune that continues to grow year after year - long after any memory of you has passed. If all else fails and the trust has seen the last of all possible blood relatives, the trust might resort to funding something you love, like fishing or preserving wildlife, as well as helping less fortunate people experience such pleasures. Think that in the future your funds might fund inner city kids from across the country to take an annual musky fishing trip to northern Wisconsin or send under privileged families to exotic destinations like Fiji.

I really like the idea of allowing what ever wealth my wife and I accumulate but for some reason cannot entirely spend by the time pass away, to live on indefinitely to make life better for those we care most about first and foremost but beyond that help others appreciate those things we really enjoy. Cash gifts are nice to receive, but most people don't mange cash well and if you give it to institutions there is no telling what they are going to spend it on - new buildings, seats in an auditorium, new carpets, etc. - I wouldn't want that. There is also trouble with inheritance as cash gifts because it can lead to inter family feuds struggling for control of greater shares. Providing longer sustained assistance through intelligently dolling out funds that are managed with clear goals and direction in terms of how the money is used ensures that funds will have a long and bright future. The key is not to give away cash but rather help out in other ways. Managed funds described in a detailed will or trust as opposed to cash giveaways are the same thing as giving a homeless person a sandwich or an apple as opposed to a dollar. If you give the homeless person a dollar there is no telling what they will spend that on - hopefully to eat, but you never really know. On the other hand, if you a homeless person a sandwich you know for sure that they at least have had something decent to eat.

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