How to Create a Multigenerational Wealth Strategy That Lasts
By Team Seneschal
If you want to pass on more than just money to your children and grandchildren, a family trust could be the most powerful tool in your estate planning arsenal. It's not just about tax savings or avoiding probate. A well-structured trust can preserve family values, minimize conflict, and protect wealth for generations.
This blog post is designed to help you think strategically about creating a family trust structure that supports your financial goals and your legacy.
What is a Family Trust?
A family trust is a legal entity created to hold and manage assets for the benefit of your heirs. It can be revocable or irrevocable, allowing you to define how and when beneficiaries receive their inheritance.
Trusts can own real estate, investments, businesses, and more.
The trust is only part of the equation. The key is how you structure it.
Start with Your Values, Not Your Assets
Before deciding what to put in a trust, ask yourself: What do I want this money to accomplish?
Some families use trusts to:
- Encourage education by releasing funds only after a college degree
- Promote entrepreneurship by seeding a business venture
- Support philanthropy by directing funds to charitable causes
Starting with your values helps you design a trust that reflects your goals, not just your balance sheet.
Choose the Right Type of Trust
Here are three common types of family trusts:
Revocable living trusts allow you to retain control of your assets during your lifetime and provide a smooth transfer at death. However, they don’t offer asset protection.
Irrevocable trusts remove assets from your estate for tax and asset protection purposes. It requires you to give up control.
Dynasty trusts are designed to last for multiple generations, often used to create a lasting family legacy.
There’s no one-size-fits-all answer. The right choice depends on your estate size, tax situation, and family dynamics.
Name Trustees with Care
Your trustee will make critical decisions about managing and distributing your assets. This role carries legal and fiduciary responsibilities, so choose someone responsible, impartial, and aligned with your values.
Options include:
- A trusted family member
- A professional fiduciary
- A corporate trustee
In some cases, a directed trust structure makes sense. It separates the administrative duties (handled by a trustee) from investment or distribution decisions (managed by a qualified financial advisor).
Create Clear Distribution Rules
Clarity avoids conflict. Spell out:
- Age-based milestones for distributions
- Education or achievement-based benchmarks
- Emergency or discretionary access
Many families favor staggered distributions, which provide funds at key life stages rather than all at once. This approach promotes maturity and responsibility.
Incorporate Financial Education
Even the best trust can fail if beneficiaries aren’t financially prepared.
Consider:
- Holding annual family meetings to review trust goals
- Bringing in financial advisors to teach investing and budgeting
- Requiring beneficiaries to complete financial education courses before accessing funds
This builds stewardship, not just wealth.
Protect the Trust
Trust assets can be vulnerable to divorce, lawsuits, or mismanagement.
Use provisions like:
- Spendthrift clauses (provisions in a trust or will that prevent beneficiaries from selling or transferring their trust income or assets, protecting the funds from creditors and ensuring they are used as intended).
- Divorce protection language
- Independent trustees
Also, consider jurisdiction. Some states, like South Dakota and Nevada, offer enhanced asset protection and longer trust durations.
Think Long-Term
A trust isn’t just a legal structure. It’s a vehicle for passing on your family’s story, values, and mission.
Consider adding:
- A letter of wishes outlining your hopes for the trust
- A mission statement that guides future trustees
- A family constitution to help resolve disputes
These elements can be as important as the trust document.
Review and Update Regularly
Life changes. Tax laws evolve. So should your trust.
We recommend reviewing your trust at least every three to five years, or after any significant life event (birth, death, marriage, divorce, sale of a business, etc.).
An outdated trust can lead to unintended (often adverse) consequences.
Final Thoughts
Creating a family trust is about more than avoiding taxes or simplifying probate. It’s about taking control of your legacy. With the proper guidance and foresight, your trust can be a foundation of support, values, and opportunity for generations.
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