Over the next 20 years, more than $80 trillion could end up in the hands of younger generations through large wealth transfers. But for a variety of reasons, many baby boomers, especially the very wealthy, are hesitant to pass on their financial legacy to their children.
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Some wealthy boomers are distributing their inheritance during their lifetime, so to speak. Joe Phalen, president and partner at Acquirance, previously told GOBankingRates, “For lack of a better word, if wealth creators still exist as a resource for children, “We’re not just flying blind at that point.”
But there are other options that allow wealthy business owners to provide funds to their heirs and still have some control over how it is spent after death. It’s an entrepreneur’s trust.
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What is Entrepreneurial Confidence?
Entrepreneurial trusts provide access to capital that allows heirs to take on business risks, start their own companies, or provide venture capital to other companies while receiving guidance from an experienced trustee A financial account.
The goal is to foster an entrepreneurial spirit while giving your heirs a sense of empowerment without risking wasting their money or resting on the laurels of your family’s legacy. An entrepreneur’s trust provides a balance between allowing your heirs to use your inheritance as they see fit and ensuring your heirs are good stewards of your money.
Is an entrepreneurial trust appropriate for your family’s wealth?
Trusts protect assets across generations and aid in estate planning. According to Dominion.com, unless you have more than $10 million in assets, you may not need to consider starting a trust.
At that point, the trust will enable premium investment options and tax-reducing strategies, making the time and expense of establishing a trust worthwhile, according to the company’s website.
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An entrepreneur trust is a specialized trust that can be customized to suit your family’s needs. You get more than just asset protection benefits. It will allow future generations to maintain and continue to grow their family’s wealth, potentially countering the three-generation curse that befalls 90% of wealthy families.
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This article originally appeared on GOBankingRates.com: Should you include an Entrepreneurial Trust for your children in your estate plan?
