A New Approach: Preserving the Blessing of Wealth Through Estate Planning.

• Author: Claflin, David
• Position: Estate planning

experience shows that by the time grandchildren succeed to inherited wealth, more times than not, it has been dissipated or has produced disappointing results because of entitlement, "affluenza," "trust addiction" and broken lives. Aware of the potential for inherited wealth to create unintended results, some of our clients (including those not mega-wealthy) are wondering if there's another way. Is it possible to prepare future generations to use inherited wealth through positive values and the capacity to contribute to family, business and our larger society?

"Shirtsleeves to shirtsleeves in three generations" is an aphorism found in cultures around the world used to describe the tendency of the third generation of a family to squander the wealth obtained by the first. So what are our clients' chances of beating these odds? And more to the point: What contribution might CPAs offer to clients who share these concerns?

Shirtsleeves to shirtsleeves doesn't have to be--inherited wealth can become a blessing to future generations and lor many generations into the future; and CPAs are uniquely positioned to be part of that solution.

Recognizing the Problem

If you think we're treading into the exclusive domain of estate planning attorneys, think again. The situation we see--where affluenza is the norm--has been presided over for decades by traditional estate planning attorneys as the gatekeepers for family inheritance.

The solutions offered include: living trusts, bypass trusts, QTIP trusts (lifetime and postmortem), QPRTs, intentionally defective grantor trusts (IDITs), beneficiary defective grantor trusts (BDITs), dynasty trusts, self-settled trusts, off-short trusts, gifting trusts, medicaid qualification trusts, discounting strategies to devalue assets for transfer tax purposes, "estate freezes," family limited partnerships and many more tax saving and asset protection devices.

It's true, these strategies in many cases have worked miracles in reducing transfer taxes and income taxes, and in protecting assets from loss in divorce and to marauding-creditors. We've done a marvelous job of answering the tax and asset protection issues.

Still, many of us feel that traditional estate planning somehow missed the most important point: What about the human values that many families would relish even more than tax savings?

If traditional estate planning tax strategies morph into aiding a drug addicted grandson, what difference does the tax savings...