Values-based Estate Planning

Values-based estate planning is an approach to estate planning that builds your values and priorities into your estate plan.  It does not focus only on transferring wealth and saving taxes.  A values-based estate plan sends a message to future generations about the values their parents, grandparents and great-grandparents thought were important.

Examples of values-based estate planning tools include mission statements, values-based trust distributions, dynasty trusts, and family foundations and donor-advised funds.

What values-based features can you put into your estate plan?  Almost anything.  An estate plan is a blank slate. It is limited only by your imagination.  But don’t get too carried away.  An estate plan should be kept simple.  The more complicated an estate plan is, the greater the likelihood of unintended consequences.  There is danger in trying to control too much from beyond the grave.

The Mission Statement:  Many people include mission statements in their estate plans.  A mission statement can say anything that you want it to say.  Trusts can last for several generations.  Including a mission statement in a trust can thus convey your values, priorities and philosophy of life to generations not yet born.

Values-based  Trust Distributions:  Most irrevocable trusts exist to provide general financial assistance to the beneficiaries.  But trusts can also direct distributions to beneficiaries for more particular purposes.  A trust can authorize distributions for nearly any purpose that the creator of the trust wants.  A trust can thus not only provide the financial means to implement the creator’s vision.  It can also send a message to future generations that the trust’s purpose is something that was very important to the creator of the trust.  Some examples of directed purpose distributions might be:

•  A couple may want to provide an educational safety net for all of their grandchildren.  The trust could direct the trustee to pay the educational expenses of all of the couple’s descendants.

•  A grandmother may want to set aside funds to ensure that all of her grandchildren will have the financial ability to serve LDS missions, if they so choose.  The trust could direct the trustee to pay the beneficiaries’ mission expenses.

•  An entrepreneur may want to encourage his children and grandchildren to develop an enterprising spirit.  Accordingly, the trust he establishes for a child or grandchild may authorize the trustee to distribute or to loan trust funds to the beneficiary to start a business if the trustee believes the business concept is well-developed and shows promise.

•  A mother may want to encourage her children and grandchildren to pursue careers that are socially valuable, even if such careers are not financially lucrative, such as a career as an elementary or high school teacher.  She can authorize the trustee to make distributions from the trust to provide additional compensation to such a beneficiary.

Dynasty Trusts:  “Dynasty trust” is a generic term that refers to any trust that is designed to last for several generations.  In some states, a trust can last in perpetuity.  In Utah, the law is not clear, but a trust might be able to last as long as 1,000 years.  At the very least, it can last several generations.  A dynasty trust can be created for a particular purpose, as described above, or it can exist for the general purpose of supporting a family – or a combination of both.

Family Philanthropy:  Some families transmit their philanthropic values to younger generations by creating a family foundation.  The family members sit on the board of trustees of the foundation and decide what grants should be made each year. 

A disadvantage to a family foundation is that the administrative responsibilities and costs (such as attorney and accountant fees) can be quite burdensome.  A popular alternative to a family foundation is a donor-advised fund under the umbrella of a community foundation.  With a donor-advised fund, the community foundation handles all of the legal, accounting and other administrative matters.  All the family members need to do each year is determine to whom the grants will be made.  Click this link for a list of some community foundations in Utah.  Then click on the bookmark on the left:  Utah Community Foundations.

To learn more about utah estate planning, go to The Utah Trust & Estate Educational Resource Center.

Rust Tippett is the author of this blog post.

Copyright 2012 UNLEPI, LLC, a Utah limited liability company.  All Rights Reserved.

This blog post in no way creates an attorney-client relationship between the reader and either Robert S. (Rust) Tippett or Bennett Tueller Johnson & Deere, P.C.  The reader should consult with his or her own estate planning attorney regarding his or her particular circumstances.


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