Family Trusts

HARTLEY GOLDSTONE, JD, MBA, works with institutional and individual trustees, family offices, and beneficiaries in all stages of life to identify—and then achieve—positive possibilities in the relationship between beneficiary and trustee. A Research Fellow with Wise Counsel Research, Hartley is the co-author of TrustWorthy: New Angles on Trusts from Beneficiaries and Trustees, and a popular speaker about flourishing “trustscapes.” JAMES (Jay) E. HUGHES, JR., is the author of the acclaimed classics Family Wealth and Family: The Compact Among Generations, and the co-author of The Cycle of the Gift: Family Wealth and Wisdom and The Voice of the Rising Generation. He has also written numerous articles on family governance and wealth preservation. A Research Fellow with Wise Counsel Research, Jay is a frequent speaker at symposia on the growth of families’ human, intellectual, social, spiritual, and financial capital. DR. KEITH WHITAKER is founding president of Wise Counsel Research, a think tank devoted to studying wealth and philanthropy. Keith has many years’ experience helping enterprising families communicate around estate planning and charitable giving. His writings have appeared in The Wall Street Journal, The New York Times, and the Financial Times. Keith is the co-author of The Cycle of the Gift: Family Wealth and Wisdom, The Voice of the Rising Generation: Family Wealth and Wisdom, and Wealth and the Will of God.

• Acknowledgments xvForeword xviiPreface xxvIntroduction 1Keith WhitakerPrinciples 3Notes 13Part One: Introducing the Trustscape 15Chapter 1 Navigation Works Better When You Have a Destination in Mind 17Beyond the Thought Experiment 20Questions for Reflection 22Note 22Chapter 2 The Trustscape 23Introducing Your Trustscape 25A Dynamic Tableau 26A Closing Exercise 27Note 28Chapter 3 Some Key Terms 29Chapter 4 Know Your Narratives 33Depends Where You’re Sitting 35A Thirst for Education 36Note 39Part Two: The Players 41Chapter 5 The Trust 43A Short Description of a Long History 44A Closing Exercise 47Notes 50Chapter 6 The Trustee 51The Trustee 52Choices 55Chapter 7 Beneficiaries and Trust Creators 59Beneficiaries 62Trust Creators 66Notes 75Chapter 8 The Trust Protector and the Trust Adviser 77Trust Advisers 78Trust Protectors 79Choices 81Part Three: Building Great Relationships 85Chapter 9 Considerations Prior to Accepting Appointment as Trustee 87So—You’ve Been Asked to Serve as Trustee 89Now for Some Homework 89If You are New to the Trustscape 90Understanding the Technical Side 91Almost There 93A Final Step 94Note 95Chapter 10 Creating Preambles 97Preambles and Purpose 98“But My Trust Was Drafted 20 Years Ago!” 100Themes and Schemes 101Preambles Created by Trustees and Beneficiaries 102Revisit the Preamble 103As You Begin to Create Your Preamble 104Note 105Chapter 11 Action Steps Prior to the First Trustee-Beneficiary Meeting 107If You are a Trustee 108If You are a Beneficiary 110Note 113Chapter is Positive Events, Supportive Responses 115Matching Mind-set to Task 116Supportive Responses to Positive Events 119Play to Your Strengths 121Notes 122Chapter 13 Trustee-Beneficiary Meetings 123Premeeting Checklists 124If This is the First Meeting 126A Sampling of Agenda Items 128An “Appreciative” Exercise 130Note 131Chapter 14 Requests for Distribution 133“This Worked because I Knew Susan . . .” 135The Request Process 137Analysis of a Request 139About Enhancement 142Note 143Chapter 15 Working with Addictions 145Chapter 16 Trusts and Marriage 153Prenuptials 154Within Marriage 157Second Marriages and Beyond 161Notes 163Chapter 17 Transitions 165Solomon’s Ring 165This Too Shall Pass 166Changing the Trust 167Changing the Players 169Coming to an End 171Note 173Part Four: A Comprehensive Model for a Humane Trustscape 175Chapter 18 A Promise and a Challenge for Trust Creators 177A Trust Creator’s Challenge 178First, an Exercise for Trust Creators 179Note 180Chapter 19 The Highest Duty of the Trustee and the Corresponding Responsibility of the Beneficiary 181I Wrote These Great Docs, but My Clients Won’t Sign . . . 183The Highest Duty of the Trustee and the Corresponding Responsibility of the Beneficiary 184Support for the Trustee 186Support for the Beneficiary 188Chapter 20 The Distribution Committee and the Office of the Beneficiary 191Distribution Committee 192The Office of the Beneficiary 195Conclusion 201Chapter 21 The Trustee and the Trust Protector Revisited 203Which Cap’s on Top? 205A Different Approach 206Reconsidering the Institutional Trustee 209Note 211Appendices 213Appendix 1 Sample Legacy Letter 215Appendix 2 Sample Language Regarding Addiction 223Appendix 3 The Distribution Committee 235The Core Concept 236Committee Members 237Drafting Points 238Appendix 4 Private Trust Companies 243Definitions 243PTCs versus Individual Trustees 244Governance 246Best Practices 248Appendix 5 Family Trust Review 253Purpose 253Content 253Process 254Why Commission a Family Trust Review? 254Opportunities for Commissioning a Family Trust Review 255Note 256Appendix 6 Reflections on the Often Unexpected Consequences of the Creation of a Perpetual Trust 257By James E. Hughes Jr., Esq.Notes 273About the Authors 275Index 279