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Estate Plan With Your Soft Goals In Mind

Technical goals are extremely important when creating an estate plan, such as protecting your assets from creditors’ claims and minimizing gift and estate taxes. However, your ‘softer’ goals should also be considered.

Softer goals may be included in what is known as a family advancement sustainability trust (FAST). This can include educating your loved ones on how to manage their estate responsibly. Management and moral values you want instilled also can be expressed through your estate in addition to activities such as charitable donations.

Fill The Leadership Gap
It’s not unusual for the death of the older generation to create a leadership gap within a family. A FAST can help fill this gap by establishing a leadership structure and providing resources to fund educational and personal development activities for younger family members.

For example, a FAST might finance family retreats and educational opportunities. It also might outline specific best practices and establish a governance structure for managing the trust responsibly and effectively.

Form A Common Governance Structure
Typically, FASTs are created in states that 1) allow perpetual, or ‘dynasty,’ trusts that benefit many generations to come and 2) have directed trust statutes, which make it possible to appoint an advisor or committee to direct the trustee regarding certain matters. A directed trust statute makes it possible for both family members and trusted advisors with specialized skills to participate in governance and management of the trust.

A common governance structure for a FAST includes four decision-making entities:

  1. An administrative trustee — often a corporate trustee, that deals with administrative matters but doesn’t handle investment or distribution decisions
  2. An investment committee — consisting of family members and an independent, professional investment advisor — to manage investment of the trust assets
  3. A distribution committee — consisting of family members and an outside advisor — to help ensure trust funds are spent in a manner that benefits the family and promotes the trust’s objectives
  4. A trust protector committee — typically composed of one or more trusted advisors — which stands in the shoes of the grantor after his or her death and makes decisions on matters such as appointment or removal of trustees or committee members and amendment of the trust document for tax planning or other purposes

Explore Funding Options
Establish a FAST during your lifetime. Doing so helps ensure the trust achieves your objectives and allows you to educate your advisors and family members on the trust’s purpose and guiding principles.

FASTs generally require little funding when created, with the bulk of the funding provided upon the death of the trust holder. Although funding can come from the estate, a better approach is to fund a FAST with life insurance or a properly structured irrevocable life insurance trust. Using life insurance allows you to achieve the FAST’s objectives without depleting the assets otherwise available for the benefit of your family.

Is A FAST Right For You?
If your children or other family members are in line to inherit a large estate, a FAST may be right for you. Properly designed and implemented, this trust type can help prepare your heirs to receive wealth and educate them about important family values and financial responsibility. We can help you determine if a FAST should be part of your estate plan.

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