Thinking long-term is difficult for many people when it comes to estate planning, especially because of all of the uncertainties that the future presents. However, it is important for the very wealthy to think about future generations if they want to truly create a lasting legacy.
According to a recent article by the Wall Street Journal on the topic, this is an issue that people experience when they are in the first generation of their families to have wealth. The article said that there are a few factors that can make planning for the distant future more accessible for these individuals, including:
Taking time to adjust
It can be very overwhelming for people who recently came into wealth to think about planning for decades or even centuries from now, so it is often helpful to first adjust to managing their own wealth, then thinking about their immediate errors, and then eventually planning for future generations.
Building in flexibility
The WSJ article said that estate planning lawyers and other professionals are increasingly turning to flexible solutions to ensure that a multigenerational trust can withstand the test of time. For example, this may include using trust protectors to modify an otherwise irrevocable dynasty trust.
Another estate planning tool that is being used to add flexibility to trusts is known as decanting. This involves moving assets from an old trust to a new trust that has different restrictions on who can be the trustee and how the distributions can take place.
Finally, the WSJ article said that some people are choosing to forgo trusts altogether in exchange for a family limited partnership or family limited liability company, which allow changes in investments and distributions to be made easily.
Working with a professional
People who want their wealth to carry on for generations must create an estate plan making that possible. Of course, the best way to plan for the distant future is by working with an experienced state planning lawyer who can make sure all potential issues and options are addressed.
