Afraid Your Child will Misuse Your Assets?

Ozzie and Harriet, Father Knows Best, The Donna Reed Show — they all had perfect families. Even the Mouseketeers were perfect; you just know they had perfect parents and brushed after every meal.

So if you grew up thinking that your family should be like them but it’s not working out that way, it’s okay. Families do have issues, do have frictions, do have discordant members.

You may not be like the Cleaver Family. And you’re probably not like the Bundrens from Faulkner’s As I Lay Dying, either. You and yours fit somewhere between these extremes.  Most everybody does.

Regardless of where a family fits, family members sometimes have problems which don’t shrink. They often get worse. And that can complicate things for the rest of the family, if they don’t have relief.

There are old problems: drug additions, alcohol abuses, emotional illnesses. There are degrees of well and not-so-well.

There are financial issues: will everything get spent if I leave it outright? Who gets supported and then who gets the rest?

And then, just when you think every situation, every contingency is covered, new problems come up. Provisions can be made for everything you know about, but sooner or later, somebody or something will snap, crackle and pop.

Most people figure, “If I’m gone, there’s nothing I can do.” But there are things you can do. And they work.

You start with a way to provide for the family member you’re concerned about. Then you build certain creative tools into it.

The ‘way’ is a trust. But before you say “No way,” consider:

• A custodial account for a child or grandchild is a trust of sorts.
• A joint account with someone you’re taking care of is another type of trust.
• If you ever created a will to provide for minor children if you died, a trust was somewhere in its terms.

It comes down to this: you wrap assets in some paper and then hand it to a person to use in taking care of someone else. That’s all there is to a trust; every trust starts with those elements.

The person holding the assets wrapped in the paper is the trustee. Anyone with a good heart and common sense can be a trustee; caring for a beneficiary takes no special education or training; you won’t find Being a Trustee 101 in any law school or M.B.A. curriculum. And more than one person can be a trustee, so they can split the duties.

Certain banks and other financial institutions can be trustees, or serve as cotrustees with an individual. And bankers have hearts; trust department personnel don’t look like the bankers of the Dawes, Tomes, Mousely, Grubbs Fidelity Fiduciary Bank of Mary Poppins fame.

Finally, that piece of paper wrapped around the assets can be flexible. So if changes occur with the beneficiary, the protection you’ve built into the trust can be adjusted.

An example: you can draft for a beneficiary to get income. But you can also allow the trustee to pay money to a guardian, a caregiver, a hospital, etc., if the trustee believes it’s the best way to protect the beneficiary at the time.

So if you want to keep family situations covered, consider wrapping that paper around those assets. It’s sensible planning for realistic families.