Beneficiary-focused
Means integrating the words of the trust into the making of autonomous and accountable beneficiaries
Independent Trustee Services
Highly Collaborative
Means best-in-class and refers to the practice of bringing in skilled professionals when needed for their expertise
Impartial
Is an essential quality for effective trustee-beneficiary relations
A Third Option
When selecting a trustee, trust creators have traditionally been limited to choosing between a family member or a corporate entity. Over the last decade, a third option is gaining popularity: the Independent Trustee combines the stability of an institution with the relational connection of a family member while removing many of the limitations of both.
Generative Trusts and Trustees
generative: capable of producing or creating
“In every poll of trust beneficiaries that I have taken since the late 1980s, and I have taken many, the same percentages have consistently appeared: 80 percent or so feel that their trusts are a burden, 10 percent a blessing, and the remainder are unsure.”
-Keith Whitaker, PhD
Generative Planning’s desired outcome is to provide the optimal amount of financial inheritance at the right time and in the most effective manner for each beneficiary so that it will enhance the quality of their lives while avoiding unintended negative outcomes.
A Generative Trust is a trust whose central purpose is the growth and well-being of the beneficiary. The trust creator’s dreams are for the potential positive and sustainable influence that the trust and trustee will be in the life of their beneficiary.
-John A Warnick GENERATIVE TRUSTS AND TRUSTEES: A NEW PARADIGM FOR TRUST DESIGN AND ADMINISTRATION
The Generative Trustee:
Aims to “improve” the distribution function, leading to more positive trustee/beneficiary relationships and promoting the individual growth and well-being of beneficiaries.
The ideal trustee is the one who helps beneficiaries think for themselves instead of robbing them of that ability.
-Hartley Goldstone
If you talk to families – especially psychologically minded grantors – they want someone to do a good job of managing distributions. The goal is to balance beneficiary autonomy with beneficiary accountability. That is the hard part.
-James Grubman PhD
Traditional Trusts vs. Generative Trusts
| Traditional Trust | Generative Trust | |
|---|---|---|
| Focus of Planning | Generator driven | Beneficiary Wellbeing |
| Methodology | Transactional | Relational |
| Objective | Prepare $$$ for beneficiaries | Prepare beneficiaries for $$$ |
| Desired Outcomes | Asset growth and retention | Optimize human capital |
| Priority of Function | Investment Management | Dispositive (Distributive) |
| Distributions | HEMS “Limited to 4 Corners”
ATM-like remittance |
Discretionary “First, do no harm”
Life-enhancing |
| Spirit of the Trust | Negative and Defensive | Infused with Positivity |
| Trustee Type | Institutional/Corporate | Generative and Cooperative |
| Drafting | Boilerplate “one size fits all” | Customized to the individual |
| Type of Instrument | Irrevocable Trust | Directed/Delegated Trust |
| System Architecture | In-house/All-in-one Provider | “Trifurcation” of Best-in Class |
| Fee Structure | % of total estate value or embedded in AUM fees | Flat fee based on services |
| Conflict of interest | Yes/Distributions reduce AUM | Conflict-free |
| Accessibility to trustee | Limited due to high caseloads | Immediate due to limited number |
| Duration of trust | Long as possible | Until beneficiary can receive the trust assets outright and constructively manage them unless disabled. |
| Provision for Mental Illness/Addiction Issues | Limited to none | Collaborative and customized |
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