With restrictions winding down and summer in full swing, Americans are beginning to experience some of the wonderful travel they previously deferred. Some reports show travel spending is on the rise, and spending on experiences is outweighing spending on goods.
Travel can be a sustainable way to avoid burnout so we can accomplish our best work the rest of the time. As we age, some activities enjoyed in our younger days may no longer be possible. Nevertheless, it is still important to plan and budget to have money to enjoy yourself and travel.
Sometimes travel is not an individual expense, but rather a larger family expense. A wealthier parent or grandparent might take on the cost to allow everyone in the family to participate. This might begin the tradition of an annual cruise or trip to Disneyland, for example. How might the family keep those reunion trips happening after the grandparent passes away? A trust is one way to do so.
Here is a fictional example:
Alice’s parents brought her to America when she was twelve years old and the family settled in Arkansas. They kept in touch with their European relatives over the years, and one of Alice’s children even moved back to Europe after falling in love with the college he attended there. Alice’s other two children live in America—one of them lives in Florida, and the other lives several miles away in Alice’s hometown.
After Alice had grandchildren, she wanted to ensure everyone had a chance to meet up and see each other annually. Zoom meetings did not quite create the close-knit familial harmony she was used to. On the other hand, she knew even if he wanted to, her son living in Europe could not afford to bring his whole family to America every year. The travel cost burden was different for each child, but she wanted everyone to be able to participate. One year, Alice announced she would provide $30,000 each year to help cover travel expenses and facilitate family reunions. Twice they had the reunions in Europe as a change of pace, so everyone could experience both communities. The reunions became so important to the family that Alice built them into her estate plan.
Upon her passing, an irrevocable trust was created with the sole purpose of funding family travels. It was set so the beneficiaries could only use the funds for travel. Although it was only one part of the overall plan, this additional provision would ensure the tradition could continue for many years to come.
Could the same thing be accomplished by giving the money directly?
Yes, but will it? The largest reason to favor a trust over a direct gift is to direct the inheritance toward creating a specific experience or memory, and travel can be one factor in facilitating it. On a smaller scale, consider the growing popularity of gift cards. Gift card giving has grown substantially in the last five years, with no sign of slowing. It gives some flexibility to the receiver, but also designates a purpose for the funds. This helps create a memorable experience, whereas cash is often used to pay off the most recent bills (also a good thing).
By utilizing a trust instead of a direct inheritance, your impact would continue though the experiences directly tied to your wishes. Such experiences could include the opportunity for children to connect with their heritage or religion, study abroad, or even do philanthropic work in another country.
Perhaps you feel particular places changed your life—such as the Grand Canyon, or the aurora borealis in Alaska, or the Badlands in South Dakota—and your sentiment cannot be expressed in words alone. You could create a fund that encourages family members to share in the same experience. You could even create messages to be shared along with the funds for each experience so they have a chance to reconnect with you after you are gone.
Can the trust designate the use of funds toward other goals?
This depends entirely on the values of the trust creator, and the terms of the trust. Many trusts do not have restrictions placed on them at all, but some suggest the funds can only be used for specific purposes to ensure they create positive change for the beneficiaries. This would not only include travel—more conventional examples include education, or a home purchase. Requirements can also be put in place, which trustees must meet or abide by in order to access the funds.
At Arvest Wealth Management, we have experience working with many clients, but also understand every situation is unique. We would be pleased to share ideas for how trusts can help achieve different goals based on your situation and based on what has worked for others. We invite you to schedule a meeting with one of our trust officers to explore how a trust can help you and your family.
This content has been prepared by The Merrill Anderson Company and is intended as a general guideline.
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