Establishingan estate plan involves much more than evaluating strategies tominimize taxes. The decisions you make on transferring your wealth willalso reflect, consciously or unconsciously, your values.
Should a trust distribute money to children or grandchildren while theyare young, or only after they have reached a certain age or achieved aspecified goal?
Should all heirs be treated equally or should individualcircumstancesaffect distributions?
There are no rules of thumb for these types of decisions, butyoushould be aware that your estate plan will convey messages as well asmoney.
Those who want to impart a work ethic may set up a trust thatwill helptheir children buy a house, but only if they invest a portion of theirown money in the purchase.
Others who wish to encourage self-reliance may set up a trustthatoperates much like an investment bank, where beneficiaries presentinvestment ideas or propose business ventures to an investmentcommittee. Seats on this committee are often rotated among familymembers for the sake of fairness.
Receiving a large sum of money at a young age can beoverwhelming. Asan alternative, a trust might fund educational costs and perhaps a carpurchase or house down-payment, but delay other disbursements until abeneficiary reaches age 30 or 35.
At that point, parents or grandparents can decide whether thebeneficiary is prepared to handle the funds responsibly.Settling upon how to apportion your assets among heirs mayinvolve verytough decisions. The fairest solution may seem to be to divide themevenly.But that's not always a wise choice, particularly when afamilybusiness is involved.If one child is deeply involved in the business while othersare not,giving all children equal control may be a recipe for trouble.The child who knows the business well may find himselfanswering tosiblings who care little about it. When possible, interested familymembers should be given control of businesses.If a clear and decisive passing of the baton is not possible,it may bebetter to look for a buyer or bring in professional managers ratherthan to allow family disputes to force a distressed sale later.Because decisions regarding beneficiaries can be difficult,some peoplechoose to establish highly flexible trusts and rely on a trustee, oftena family member or friend, to be there to make choices as events unfold.Some also appoint a corporate trustee or co-trustee, who canserve as adisinterested party and assist the individual trustee.Estate planning can be a complex family affair. However, thepeace ofmind one achieves as a result of executing a well thought out plan canbe invaluable.Linda Knepp Camella is vice president and residentmanager ofMerrill Lynch, Wyomissing. 2002,Reading Eagle, Pa.Distributed by Knight Ridder/Tribune Business News.
