The Wealth Creation Trust: A Gift That Keeps On Giving

In today’s world, finding the perfect gift for your child or grandchild on special occasions like their birth, Bar or Bat Mitzvah, Sweet 16, or Quinceañera can be a challenging task. The typical presents from stores often lack the lasting impact we desire for our loved ones. Instead, consider a gift that goes beyond material possessions – a gift that provides security, resources, and a strong foundation of love. This gift is none other than the establishment of a Wealth Creation Trust.

The Pitfalls of Traditional Monetary Gifting

In many cases, well-meaning family members, especially grandparents, wish to gift a child a sum of money to mark a significant life event. Typically, these gifts take the form of checks written either to the parents or directly to the child, which are then deposited into a custodial account at a bank. However, this approach often leads to various challenges and missed opportunities:

1. Funds Get Lost in Family Accounts

It’s surprising how often parents cash the check and commingle the gifted funds into their family accounts. In such cases, the child rarely gets to see the full benefit of the gift, and its intended purpose may be lost.

2. Unplanned Spending

When the child gains access to the custodial account at the age of 18 or 21, they may make impulsive decisions about how to utilize the money without considering its long-term implications. This can result in the funds being squandered on purchases like cars, backpacking trips, or even a house.

3. Impact on Financial Aid

Using gifted money to pay for college can backfire when it comes to financial aid. It can count against the child’s eligibility for assistance, and the college degree may not yield the expected returns, making the gift effectively wasted.

4. Risk of Marriage and Divorce

If the child uses the gifted funds after getting married and commingles them with their spouse’s assets, there’s a risk of losing those assets in the event of a divorce.

The Better Way: Wealth Creation Trust

Fortunately, there is a far superior approach that benefits not only your family but also the child and society at large. Consider establishing a Wealth Creation Trust for your child or grandchild as a thoughtful birthday or birth gift. Here’s how it works:

1. Gifts to the Trust: Encourage your family to direct all gifts for the child to the Trustee of the Wealth Creation Trust from that point onwards.
2. Educational Opportunity: When the child reaches a specified age mentioned in the Trust, they can become a Co-Trustee, learning to operate the trust and maximize its benefits. They receive training on various investment options, with an emphasis on self-care, well-being programs, and entrepreneurial training. This education equips them to make informed decisions about the trust’s assets.
3. Purpose-Driven Investments: The trust assets can be invested in one or more entrepreneurial ventures that align with the child’s values and have the potential to create positive societal impact. This approach ensures a return on investment in the form of appreciation and meaningful, purpose-aligned work by the child.

The Goals of the Wealth Creation Trust

The Wealth Creation Trust serves multiple essential purposes:

1. Inter-generational Wealth: Its primary purpose is to encourage the creation of wealth from one generation to the next, rather than the squandering or wasting of assets.
2. Asset Protection: It teaches the child how to protect the trust’s assets by keeping investments in the trust’s name, regardless of how they are used. Proper titling of investments and signing on behalf of the Trust ensures asset security.
3. Wealth Generation: It empowers the child to create more wealth in the future using the trust assets, fostering a legacy of financial stability and impact.

Now, the gift you bestowed upon your child at birth or on a significant life milestone becomes more than just a financial safety net. It transforms into a lifelong educational and impactful asset.

Tax Benefits

Gifts of up to $17,000 per year (as of 2023) per person can be contributed to the Wealth Creation Trust for your child without the need to file a gift tax return, making it a tax-efficient way to secure your child’s future.

In conclusion, the Wealth Creation Trust is a visionary approach to gifting that offers enduring benefits for your child, your family, and the world. By redirecting monetary gifts into this trust, you provide a valuable educational opportunity and a means for your child to make a lasting impact on society. It’s a gift that truly keeps on giving.

Give us a call at 208-406-9885 to discuss how you can build a Wealth Creation Trust for your family.