One of the most difficult challenges to first-generation wealth creators thinking about succession strategies is how to pass wealth from one generation to the next without destroying incentive or dividing the family, Friedman said.
“The most successful families have strategies that look at platforms such as philanthropic giving and family foundations as a way to inculcate and transfer family values to withstand the challenges presented by wealth,” he said. “The structures that are created to optimize tax benefits need to be an outgrowth of broader strategies for passing wealth and values to the next generation to optimize the financial capital and human capital of the family.”
Andrew W. Mayoras, attorney and co-author of Trial & Heirs: Famous Fortune Fights!, shared a case that showed sometimes setting up a trust to protect your assets can backfire in an unexpected way.
One young adult was convinced by his parents to set up a trust when he received a large sum of money in a personal injury lawsuit.
“At first, his father was trustee and everything was fine,” Mayoras said.
Then the father passed away, and a new trustee took over.
Mayoras’ client ended up suing the new trustee because he was overly restrictive releasing the money.
“Years later, my client very much regretted his decision to set up the trust,” Mayoras said. “Hopefully Carter-Williams won’t end up in the same boat. While it’s certainly a unique approach for the young athlete to safeguard his money, it does carry risk with it that it will be overly restrictive.”
Article Appeared @http://abcnews.go.com/Business/philadelphia-76ers-rookie-michael-carter-williams-touch-money/story?id=21080634&singlePage=true
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