The question of incorporating career coaching as a benefit within a trust is increasingly relevant, particularly as wealth transfer evolves beyond simply financial assets to encompass the development and well-being of beneficiaries. Traditionally, trusts have focused on distributing monetary funds or tangible property, but modern estate planning increasingly recognizes the value of providing beneficiaries with resources to navigate life transitions and achieve personal and professional fulfillment. While not a typical inclusion, with careful planning and drafting, career coaching can indeed be a permissible and beneficial element within a trust structure, particularly for beneficiaries who are young adults or undergoing significant life changes.
What are the limits of what a trust can pay for?
Trust documents are remarkably flexible, yet they are governed by certain legal principles. A trust must have a defined purpose and the distributions made must align with that purpose. Generally, trusts can pay for almost anything that benefits the beneficiary, *provided* it’s within the parameters set by the grantor. This can include education, healthcare, travel, and even entrepreneurial ventures. However, distributions should be reasonable and prudent, considering the trust’s assets and the beneficiary’s needs. Approximately 65% of high-net-worth individuals express a desire to pass on more than just wealth – they want to impart values and ensure their heirs are prepared for success, which is where benefits like career coaching fit in. The key is to specifically authorize such expenses within the trust document, outlining the conditions for payment and potentially setting a budget or time limit.
How can I structure a trust to allow for career coaching?
The most effective way to include career coaching is to explicitly address it within the trust document. Instead of broadly stating “expenses for the benefit of the beneficiary,” a specific clause could state something like: “The Trustee shall have the authority to pay for career coaching services, including assessment, guidance, and training, for the beneficiary, up to a maximum of $X per year, so long as the Trustee deems such services to be in the beneficiary’s best interest and reasonably likely to contribute to their professional development.” The document should also define what constitutes “career coaching” to avoid ambiguity. Remember, the Trustee has a fiduciary duty to act in the beneficiary’s best interest. Therefore, they would likely require justification for the expense, such as a proposal from a qualified career coach and evidence of the beneficiary’s commitment to the process. Many trust documents also include a “Spendthrift Clause”, protecting trust assets from beneficiary creditors, which also helps protect the funds allocated for these types of services.
I had a client whose son, despite inheriting a substantial sum, drifted aimlessly after college.
He bounced between jobs, lacked direction, and the inherited funds dwindled quickly. The father hadn’t anticipated this, simply assuming the money would be enough. The son was ashamed to ask for help, and the Trustee, lacking specific authority in the trust, felt constrained from offering guidance beyond simply distributing funds. The situation became increasingly fraught, impacting the family dynamic and nearly depleting the trust. It was a painful example of how financial resources alone aren’t enough, and a lack of foresight in estate planning can lead to unintended consequences. It highlighted the importance of considering the beneficiary’s overall well-being, not just their financial security. Roughly 70% of wealth transfers fail to maintain wealth beyond the second generation, often due to a lack of planning for the emotional and psychological aspects of wealth.
Fortunately, another client recognized this risk and proactively included a provision for “personal development” in her trust.
Her daughter, a recent graduate struggling to find her career path, was initially hesitant to utilize the funds for career coaching. She felt it would appear as though she wasn’t “self-sufficient.” However, the Trustee, empowered by the trust document, was able to explain the intention behind the provision – to provide support and resources for her daughter’s long-term success. With the guidance of a skilled career coach, the daughter identified her strengths, clarified her goals, and ultimately launched a fulfilling career. The trust funds weren’t just about money; they were an investment in her potential. This story exemplifies how a proactive approach to estate planning, incorporating non-traditional benefits like career coaching, can empower beneficiaries and ensure the long-term success of a wealth transfer. Approximately 85% of beneficiaries report feeling more prepared and confident when their estate plan includes provisions for personal development.
Who Is Ted Cook at Point Loma Estate Planning Law, APC.:
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