Court Bonds

Gen Z Beneficiaries?



Born between 1997 and 2012, members of Gen Z are the first generation to have grown up with smart phones and social media embedded in their lives. They are generally thought to be financially savvy, entrepreneurially inclined and charitable. Estate planning experts share ideas for how to best leave assets to Gen Z—and beyond.


Discretionary Lifetime Trust

When we have had the good fortune to accumulate more wealth then we can use in a lifetime, estate planning offers an opportunity to create a multiplier effect, as we allocate assets for prudent use by the next generation—and maybe the subsequent generation too. Thoughtfully done, estate planning reflects our values and goals. Accordingly, arrangements to gift assets can be both pragmatic and aspirational. When the intended beneficiaries are members of Gen Z, it is a good idea to lean into what makes them tick, and what gives them pause, so that estate plans align assets to their best use. Financial Advisor offers this overview of some factors to consider when estate plans involve Gen Z beneficiaries:


Despite their young age, many are saving for retirement and living frugally. The pandemic increased their financial pragmatism, motivating them to concentrate on finances and planning. The socioeconomic volatility of recent decades has also greatly shaped Gen Z’s view on risk. Having witnessed catastrophic world events, such as terrorism, wars, and recession, Gen Zers are adopting a more conservative view of investment and debt. Despite Gen Z’s sophistication, few feel confident about their financial knowledge, particularly on credit, mortgages, and student loans. The volume of information available on their favored internet platforms can be misleading and overwhelming. Because of this, Gen Z may be more vulnerable to fad investments and misinformation. Gen Z is passionate about work and independent wealth. Many earn money through freelance and part-time work. They value independent work environments and hope to start their own businesses. They also appear to be more charitably inclined than prior generations….


Because of their versatility, trusts with well-detailed provisions for the use of the assets, and a carefully designated trustee, are especially useful tools in estate planning. Trust provisions can, for example, incentivize educational and career achievements and support family goals, like home ownership, philanthropic giving or even volunteer work.

Trust expert Jennifer Davis points out that the establishment of a discretionary lifetime trust may be especially appropriate for Gen Z:


In recognition of Gen Z’s financial sophistication and pragmatism, you may wish to leave assets in a discretionary lifetime trust, which gives the trustee authority to determine whether a distribution will be in the beneficiary’s best interest. This type of trust can also achieve tax and asset protection planning….It can be drafted to include carefully crafted incentive provisions to support a Gen Z beneficiary’s goals and values, while ensuring that the trust assets are preserved and used effectively….For example…you can include provisions authorizing the use of trust assets… to start a business….The trust can be drafted to support a Gen Z beneficiary’s career choice, even opportunities that may not be financially lucrative, by including an income matching provision. If the chosen profession does not provide sufficient wages, the trust can authorize payment of expenses….


Detail Intentions

When opting for any type of trust as part of an estate plan, be sure to put enough detail into the agreement to make the purpose and conditions of use of trust funds clear. It’s also vital to choose a reliable trustee. As lawyers remind us:“With a proper trust, there will not be court involvement which means this person will have no court oversight in how they do their duties as trustee—choose wisely!” In doing so, it’s best to begin by carefully considering the qualities, skills and time commitments a trustee will need to successfully administer the terms of the trust. Learn more about the essential duties of trustees right here.  Ultimately, whether a professional, friend, or relation is selected, the trustee has a fiduciary obligation to the beneficiaries—and must always exercise reasonable care and skill in managing the assets of the trust. Accordingly, the trust agreement may require a trustee bond, which is a specific type of fiduciary bond that protects the interests of the trust and its beneficiaries in accordance with applicable state law. As a leading national provider of many types of fiduciary bonds, Colonial Surety makes it easy and efficient to obtain a trustee bond. Just get a quote online, fill out the information, and enter a payment method. Print or e-file the bond from anywhere—even the law office.


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Planning Tips for the Charitably Inclined

In many families, doing good is becoming as important as doing well, and carrying the tradition of giving across generations is a wonderful aspect of thoughtful estate planning. Learn about charitable trusts right here. Additionally, Davis provides these ideas for advancing familial philanthropic commitments across generations:


If you are charitably inclined, you can both support your favorite causes and involve members of Gen Z through vehicles such as a donor advised fund (DAF) or private foundations. Both vehicles allow you to devote assets to supporting nonprofits that further your desired charitable purposes and engage in income tax planning. The DAF is simple to administer, allowing you to recommend both investments and charities to which to donate, while the more complex private foundation allows you more control and involvement as to the use of the assets. Both are designed to continue beyond your life, allowing you to name Gen Z family members as the successor advisor.


Estate and Trust Law?

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