What will your legacy be? I don’t know about you, but until recently, I hadn’t thought much about the impact I could actually have on future generations past my kids and grandkids. It’s one thing to set up a trust (the importance of which I can’t emphasize enough, even if you mistakenly think it’s only for the wealthy!), but it’s another thing entirely to have it set up so that it continues to generate opportunities rather than simply distribute wealth.
A while back, I attended a Freedom Founder’s event where keynote speaker Garrett Gunderson, author of What Would the Rockefellers Do? How the Wealthy Get and Stay That Way, and How You Can Too, gave a talk about his book.
The gist of the book is… If you want to build a legacy that will last for generations to come, you need to do as the Rockefellers did.
The Rockefellers are often brought up along with another famous wealthy family: the Vanderbilts. The Vanderbilts established an empire, but their legacy pales in comparison to the still-flourishing Rockefeller family fortune.
The Rockefellers and the Vanderbilts were the richest families of their time. Now, six generations later, the Rockefeller trust continues to grow and be beneficial to hundreds of heirs. On the flip side, the Vanderbilt trust was gone in just two generations. They built lots of mansions but didn’t do much on the wealth-producing side of the equation.
Unfortunately, the Vanderbilts are not the exception to the rule. Statistics show that 90% of estates don’t last past three generations, even in high net worth families. You might be saying, “So what? I don’t have the amount of wealth that either of those families had, so how will this apply to me?” Your amount of wealth is not important. Here’s why.
It’s Not How Much Money You Have; It’s How You Have Your Money Set Up
The Rockefellers used two simple principles when setting up their trust that resulted in a legacy of advantages and benefits for their heirs, in perpetuity. The beauty is that anyone can follow these principles, regardless of a person’s net worth.
Rockefeller Principle #1: Keep the money together.
Having the money stay together, rather than splitting it up among all the heirs, makes it much more advantageous to use.
Rockefeller Principle #2: Set up the trust as a bank, so it will provide opportunities for the heirs, but not deplete the trust.
This allows heirs to borrow from the trust (under supervision from the trustees) with the intention of paying it back like they would a loan from the bank. If done properly, the trust can grow and survive ad infinitum.
If you were to set up your own trust like this, you could decide what types of requests would be appropriate for a loan, but some examples could include productive endeavors like starting a business, paying for college, paying for a down payment for a home, or funding any other things you and the trustees feel fit the instructions you leave behind.
Creating a Legacy of Opportunity
Instead of leaving wealth to the next generation, making them feel like they’ve won the lottery, you’ll be leaving them with something even more valuable: a legacy of opportunity. This way, the trust serves as a tool for all the heirs, giving them a leg up in the world, without the heirs becoming a burden to the trust. Isn’t that what we really want for our future generations — for them to experience the sense of pride and self-efficacy that comes from earning and achieving on their own, rather than getting a one-time gift? This strategy also prevents heirs from viewing the trust as an entitlement, which often results in the heirs producing very little or nothing of value on their own. Most of us are in the position we are today because someone gave us a helping hand (not a hand out) that may have changed the destiny of our lives, or at the very least, propelled us forward faster than we could have done on our own.
If you want to learn more, I would suggest reading Garrett’s book, What Would the Rockefellers Do? He also writes about how you can use whole life insurance as your own bank while you are alive and leave a legacy of sustainable wealth for generations to come.