Field Testing Your Trust - try it out while there's still time to adjust!

Field Testing Your Trust - try it out while there's still time to adjust!

Article posted in General on 2 June 2014| comments


Basic engineering calls for a field test before the maiden voyage - especially for a vehicle carrying precious human cargo.

Would an airplane manufacturer release aircraft that hadn't been tested?

Would you put your family on an aircraft that hadn't been tested, no matter how skilled the engineers?

Of course not!

The same basic principle applies to trusts - which also carry precious human cargo, sometimes through generations.

THE PROBLEM: Families suffer -- and legal claims arise -- out of trusts that don’t work as expected.

The fires of frustrated expectations are often fanned by non-expert and non-fitting fiduciaries. As a result, family relationships and businesses can all go up in smoke.

The story can go different ways, sometimes like this: The parents prepare estate plans. Maybe they have a brief discussion with the family member they choose to serve as fiduciaries: "Will you serve?" "OK."

And so, all too often the chosen fiduciaries aren't tested in their jobs until it's too late to change anything. And they receive no training for this sensitive and technical position.

Further, the parents refuse to share the plan details with their children. “You'll be taken care of," they say. And so, there is no opportunity for setting expectations, or better, a meeting of the minds around the disposition of assets. No opportunity for adult collaborative discussions about what best serves the family.

Also significant: there's no effort to develop the family's ability to make decisions together or to contribute to the family story.

With disability and death of the parents comes high emotions, and often the release of pent up feelings accumulated over a lifetime.

So too often we have:

  • No fiduciary or family training
  • No acceptance or consensus on asset distribution
  • No structure to create consensus
  • High, and often unstable emotions

And the fiduciaries are left in this hostile position to administer and defend the trust!

And the glue that held all together - the parents - are unavailable, so things fall apart. This is especially evident in blended families. Without the parent, the children often are less connected with the surviving spouse and her family.

It's also the scenario where there is no system to replace the strongwilled business owner who had "run" the family.

It can go downhill horribly from there!

THE SOLUTION: Field Test Process: The solution can be found by running contingency simulations. Test the trust while there is an opportunity to improve its odds for success.

First, test the trust with the key stakeholders: at least the trust creator and the fiduciaries. In playing out scenarios, look to see:

  • Does it work?
  • Does everyone understand their role and the situations they are
  • likely to encounter?
  • Does the arrangement still squarely address the challenges and wishes of the trust creator? If not, modify the trust.

Later, in a second field test, expand the test participants to include all of the trusted advisors. Through discussion and test scenarios gauge the responses to those questions and more:

  • Do all the advisors see eye to eye with each other?
    • With the fiduciaries and with the family?
  • Are they able to communicate and otherwise work well each other, or is there too much jockeying for position?

Consider performing a third simulation with the beneficiaries.

  • Are the parents and children able to begin to collaborate over building the future?
  • Are their respective concerns and goals being addressed?

With this process, families can have greater confidence that the trust will better fit and can better enjoy a more positive legacy.

See part two of this series for more detail on how to successfully field-test your trust!

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