How to build your family's wealth without giving away the
Create wealth for your family and those that follow you
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
- 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
- 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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