The purpose of an inheritance is to ensure that beneficiaries are provided for indefinitely
Ensure
Create legal boundaries so that the inheritance is protected and executed routinely. Establishment of a trust protects the inheritance indefinitely as it becomes a legal entity. Execution is a thoughtful direction of the growth and distribution of the funds. The inheritance needs to grow to serve future generations which should experience a growing beneficiary pool. Distribution speaks to providing for the beneficiaries.
Beneficiaries
Currently, beneficiaries are descendants. The committee should keep a running list of permitted beneficiaries and no benefits distributed without reconciling to that list. Upon death of a beneficiary, their inheritance may be added to the trust, and their voting rights would increase in proportion to their capital contribution.
Other beneficiaries would be permitted to join the trust. To be admitted, the new beneficiaries would make a capital commitment to the fund, submit their list of beneficiaries, and be approved by the committee. Once admitted, the beneficiaries have voting rights proportional to their capital investment, but not to exceed 49%.
Provided for
Potentially the most undefined term in this definition. To be specific, the trust will act as a source of financing for the beneficiaries’ benefit which will encourage sound capital allocation and promote behaviors that will provide for the beneficiary. As the beneficiary’s inheritance is expected to be added to the trust upon death for the benefit of future heirs, the provision will ultimately lead to an accretion of the trust as a whole. The allowed types of distribution should be in accordance with the “Benefit” section below.
Indefinitely
Alludes to a going-concern. This trust should benefit beneficiaries until the end of time. As such, there needs to be flexibility built in to allow for amendments: to add financing activities, alter the entity, and move jurisdictions.
Benefit
Distribution of funds to heirs on as-needed basis. The intention is that the trust acts as a bank for the benefit of the heirs, not a crutch. Benefits include:
Mortgage Loans
…at SOFR rates for primary homes at jumbo loan sizing maximums.
Student Loans
…at SOFR rates. Must submit:
a) degree program
b) total tuition and
c) first year salary expectations
The purpose is to help finance education leading to productive employment. Total tuition should be less than the expected first year salary to approve the loan.
Such constraints may limit:
a) whether the degree program is in or out of state
b) unproductive degree programs or
c) employment that does not provide for the individual or their family.
Upon receipt of the degree, the loan, at the discretion of the committee, could be terminated, putting emphasis on completion of the program.
Small business loans
…either:
a) at SOFR rates or
b) as equity participation
The direction is at the borrower’s discretion but the committee will determine the lending / investment terms to be considered. Borrower will provide:
a) business plan
b) organization chart and
c) sources of funds
Medical reimbursements
…at face value and reconciled by invoices. These medical reimbursements will not take the place of medical insurance under current laws and practices.
At regular intervals, conferences will be held to:
a) familiarize committee with beneficiaries
b) review benefits available to beneficiaries
c) have educational sessions and
d) review uses of funds over the previous period