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A Balancing Act
A Multigenerational Study

Fiduciary is currently working with three generations of a family: the children of the trust-establishing patriarch and matriarch, their children, and their grandchildren.

This creates interesting challenges, both for the family and Fiduciary. As a rule—and this family is no exception—the current beneficiaries of a trust tend to want the maximum benefit from that trust today. Meanwhile, the future beneficiaries of the trust, if they are alive today, want today’s money to be conserved and made to grow to the greatest extent possible, so that more benefits will be available down the road. For that reason, and for many others, the trustee has to perform a delicate balancing act across the generations.

After extensive discussions with the interested family members, we (in our corporate trustee role) established a policy whereby the current beneficiaries receive 3.5 percent of a rolling 12-quarter average of the value of the trust, regardless of what the dividends and interest might be on it on a day-to-day basis.

Family members agree that this fairly “splits the difference” between present-day payout and future appreciation.

Trusteeship, as noted, can get quite personal. Despite the size of the pool of assets controlled by the family, and despite the substantial cash flow that those assets throw off, some members of the family sometimes are tempted to live beyond their means. At Fiduciary, we have a team of people who are skilled in having exactly those kinds of conversations—and at working out a longer-term strategy that will mean that not only this generation, but future generations, will derive benefits from today’s assets.

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