What Will Anderson Cooper Inherit From his Mother Gloria Vanderbilt?

The 95-year-old Gloria Vanderbilt was “a vestige of another era, reminiscent of Brooke Astor in her longevity and tangible connection to the Gilded Age of railroad and oil barons, who left their mark on New York society,” said Trust Advisor in its recent article, “Does A Long Island Landscaper (And Not Anderson Cooper) Inherit Gloria Vanderbilt’s Fortune?”

However, unlike Brooke Astor, Vanderbilt was born in the limelight. Her long life started in the center of dynastic politics that got both messy and public. She and her trust fund became commodities in her parents’ divorce.

It’s reported that she had to sell off a few houses to pay the tax bills. Anything left behind is well-hidden in some estate planning documents. With her family fortune dwindling over time, Vanderbilt’s fashion empire came and went. However, the distributions kept coming to fill the holes. The old Vanderbilt fortune may be gone.

Her children and grandchildren built the careers they wanted, investing their inheritances into passion projects, with little or no immediate payday. Some are novelists, filmmakers, and TV journalists. Gloria built a fashion empire of her own.

As the baby, Anderson was closest to his mother. He has probably accumulated the most personal wealth after years on CNN, so he doesn’t need his mom’s money. Her oldest son Stan probably doesn’t need the money either.

Stan has a successful landscaping business in Long Island. Any Vanderbilt money he inherited along the way, is probably well invested.

There’s also a third son, Stan’s brother Chris. He walked out years ago and never really came back, at least publicly. It’s assumed that he was disinherited at the time. Now, no one is sure if Gloria wrote him out of the will. She may have written him back in. There was allegedly a bit of a thaw in the last few years.

But the moral of the story is, with a well-crafted estate plan, the public may (and likely should) never know what she left her children and in what amounts.

Reference: Trust Advisor (June 17, 2019) “Does A Long Island Landscaper (And Not Anderson Cooper) Inherit Gloria Vanderbilt’s Fortune?”

How Can I Protect My Child’s Inheritance, If They Have a Substance Abuse Problem?

Kiplinger’s recent article, “Selecting the Right Trustee and Protector for a Substance Abuse Trust,” explains that selecting the trustee for a substance abuse trust should start with a good idea of the duties they will perform. Next, find a person or institutional trustee that’s most qualified to fulfill those obligations to ensure that the child’s inheritance is protected. Parents should then think about naming a trust protector, who serves in a supervisory role to ensure that the trust is being properly administered.

The basic duties of a trustee include a fiduciary duty to administer the trust in good faith and in accordance with its terms and purposes; loyalty to the beneficiaries, by acting solely in their interests; invest the trust property prudently by considering the purposes, terms, distributional requirements, and other circumstances of the trust; and to act impartially, when there are multiple beneficiaries.

There may also be special duties of the trustee. For a child with a substance use disorder, the trustee’s duties for distributions could be linked specifically to paying for the costs of rehab, job training, professional service fees and other items that are part of the treatment plan developed by the beneficiary’s treatment team. Tying distributions into the treatment plan would mean the trustee, and maybe someone familiar with treatment management, would have to work closely with the treatment team to carry out the plan.

If the trust has incentive clauses, the trustee will also have to determine if the beneficiary has attained the goal (like sobriety for a certain period of time) and if so, the benefit to which he or she’s entitled. These can be hard to administer, since it can be hard to verify if the beneficiary has actually met the goals.

If the beneficiary is eligible for government program benefits, like SSI or Medicaid or from private health insurance, another set of duties will be placed upon the trustee to make certain that distributions won’t be classified as “maintenance” or “support.” If so, it could result in the child being declared ineligible. Since distributions from the trust are meant only to supplement the benefits that SSI or Medicaid is providing (and not duplicate or supplant them), the trustee will have to closely watch the uses of the distributions, so they aren’t support and maintenance.

You must next look at potential candidates to see who’s best suited for the role of trustee. There are two categories of trustees: individual and institutional. Individual trustees can include family members. The advantage here is that they’ll know the beneficiary and can give more personalized service than an institutional trustee. However, appointing a family member or friend as trustee may ruin the relationship, if the trustee denies the beneficiary’s demands.

You can appoint a licensed private fiduciary, trust company, bank trust department, or a corporate trustee connected to a brokerage firm to serve as the trustee to avoid possible family conflicts. However, some institutional trustees may be more focused on their investment performance, than on tending to the mental and physical needs of their beneficiaries. In the case of a substance abuse trust, “hands-on” involvement with the beneficiary is vital.

One alternative may be to appoint an individual and an institutional company to serve as co-trustees. The individual could be personally involved with the beneficiary and their treatment plan, and the professional trustee could deal with and handle the investments. However, both trustees should make distribution decisions. The best type of professional trustee for a substance abuse trust, would be one that works primarily in administering special needs trusts. These are created for the benefit of children with disabilities. These trustees will be knowledgeable about SSI and Medicaid eligibility rules.

A trust protector, depending on applicable state law, acts as the settlor’s surrogate. This continues even after the settlor dies. This allows the trust to adapt to changing circumstances. The trust protector could also direct the trustee’s actions concerning how the trust assets would be invested and could approve or deny proposed disbursements from the trust. The trustee would be obligated to comply with such directions, unless they would be manifestly contrary to the trust’s terms or a breach of the protector’s duties.

As far as a substance abuse trust, a trust protector can provide supervision, if the trustee doesn’t possess experience in coordinating trust distributions with a substance abuse treatment plan, or with monitoring the beneficiary’s eligibility for government aid programs. Instead of the trustee appointing agents to assist in these matters, the protector would actively monitor the progress of the beneficiary’s recovery and, if necessary, direct the trustee to engage a treatment manager for the beneficiary or an advocate to secure SSI and Medicaid benefits.

Support from all parties will help the beneficiary continue on the road to recovery, which is the ultimate goal of the trust.

Reference: Kiplinger (March 8, 2019) “Selecting the Right Trustee and Protector for a Substance Abuse Trust”

 

How Can a Trust Keep My Family From An Undesirable Lifestyle?

How Can a Trust Keep My Family From An Undesirable Lifestyle?
incentive trust beneficiaries

Some people are hesitant to use trusts in their estate planning. Some have the notion that if you leave money in trust, it will make “trust fund babies” of your children or grandchildren.

You may be afraid that they’ll become spoiled brats, who do nothing but spend money they haven’t earned or invest foolishly.

FEDWeek’s recent story, “Using a Trust as an Incentive for Your Heirs” explains that trust distributions can be limited to modest amounts or left to the discretion of the trustee, who’ll manage the trust assets.

This article suggests that if you do leave money in trust, you should avoid the common practice of providing for distributions at the ages 25 and 30.

That’s because, at those ages, most people are better off finishing their education and establishing their careers. Giving them a bagful of money at that age might decrease their drive to pursue a meaningful career.

One way to do this is what’s called an “incentive” trust. This type of trust offers rewards to trust beneficiaries who accomplish specific goals.

With an incentive trust, the beneficiaries might get a particular amount of money for getting higher education degrees, attaining certain levels of earned income or volunteering at a church or in the community. For instance, your trust could be drafted by your estate planning attorney to state that the trustee will distribute to each of your grandchildren a certain percentage (such as 25%) of earnings each year, up to a certain amount. This could be tied to a requirement that you make.

Another way to go about this trust is to leave the distributions to the discretion of the trustee. The trust might detail the types of activities that will be rewarded, then permit the trustee to make appropriate distributions.

When you’re going to depend so much on the judgment of the trustee, for this type of arrangement to work, it’s critical to choose a highly-qualified trustee.

The trustee could be a relative, friend, professional advisor, or licensed private fiduciary. They must be able to empathize with your beneficiaries but still make prudent decisions about distributions. It is best to nominate someone who is independent and will not benefit from the distributions themselves. In addition, add a plan for trustee succession, in case your first choice becomes unable or cannot serve.

Reference: FEDWeek (January 17, 2019) “Using a Trust as an Incentive for Your Heirs”