Over the years national publications have produced numerous articles in which concerned parents have expressed an intent to limit the inheritance of their heirs [1]. Unfortunately, the articles have often adopted an overly simplistic view by focusing on the extreme ends of the spectrum: providing a sizable inheritance to heirs (to their potential damage) or providing a majority of the inheritance to charity (and substantially disinherit family). But most planning is not done at the extremes - it's done somewhere in the middle.

For years, many planners have subtly declared that the primary goal of estate planning was to "pass as much wealth to the next generation, as tax-free as possible." This focus inadvertently resulted in the assets and taxes, not the family, being the pivotal focus. This misplaced emphasis is at least partially due to the desire to minimize the confiscatory effect of the federal transfer tax. For example, most articles in professional publications discuss tax saving techniques rather than the practical, non-tax issues of estate planning.

But a revolution is building in estate planning. Many clients have come to believe that their families have more to fear from an unearned inheritance than they do from an excessive estate tax.

This change can be summed up: "The pivotal goal of estate planning is to protect and preserve the family" not "to protect and preserve the assets." It is not that the preservation of family assets is unimportant. It just pales in significance when compared to protecting and preserving the family. The above quote by Warren Buffett captures the nature of this new perspective. Moreover, many clients have an abiding fear that they have failed to teach their children financial responsibility. As a consequence, they are unwilling to place sizable inheritances in the hands of proven spendthrifts.

Why is this distinction important? Because when the assets and taxes serve as the focal point, maximizing wealth transfers is the key planning goal. When the family is first, the plan must first concentrate on non-tax issues, such as:

• Focusing on protecting and preserving family
• Taking account of the children, marriage, personality and character of each inheritor
• Focusing on difficult family issues (e.g., the expectation of divorce)
• Minimizing the sources of potential family conflicts (e.g., personal property dispositions)
• Creating opportunities and incentives for heirs, without supporting an unearned lifestyle
• Aiding the client's desire to pass on productive values to future generations
• Encouraging charitable involvement
• Placing reasonable, flexible restraints on inherited wealth
• Building balance and flexibility in the plan to allow for modifications in the future

Some form of a restrained inheritance lies at the core of each of these issues.

One of the basic laws of science is that change is never neutral. Every change creates a reaction. Any inheritance will change behavior. The central question which must be addressed is how to encourage the change to be positive rather than negative. It is naively damaging to think that the best approach is to quietly ignore any potential impact.

The Reasons

This increasing concern about "Legacy" is the direct result of a number of demographic and societal changes. First, There has been an explosion of wealth in this country in the last two decades. It is estimated that somewhere between $10 [2] -136 [3] trillion will pass in the next fifty years. A study by US Trust [4] , noted that only 10% of today's millionaires inherited their wealth. These are largely self-made people who recognize that their struggles helped create their character. They also recognize that something given is never as important as something earned. Most millionaires have an enduring desire to use their wealth to help, but not support, their adult heirs. According to the US Trust study, 91% of the women and 80% of the men expect their children to support themselves entirely from their own earnings. They will provide opportunities, but unrestricted lifestyle support is not generally in the cards.

Second, the 2001 tax bill provides increasing estate and generation skipping tax exemptions through 2009 and elimination of the estate tax in 2010. While the continued elimination is unlikely, significant estate tax exemptions will probably remain for the foreseeable feature, reducing the tax confiscation many parents expected and increasing the concerns about too much wealth passing to family.

Third, clients are increasingly examining estate planning approaches which provide for asset protection to the client and their heirs. For example, more than 40% of first marriages end in divorce and clients are increasingly reviewing how to protect themselves and their heirs from divorce.

Last, while parents often do not want to provide family an unearned lavish lifestyle to heirs, they are almost universally concerned about providing some minimum level of support to family (e.g., providing for an education or assuring basic medical benefits). Virtually every study on governmental social programs calls for radical reductions in future benefits to keep the programs afloat. Recent tax changes appear to be designed at least partially to encourage the private sector to take over as much of this responsibility as possible. As a result of demographic imperatives (e.g., the aging baby boomers), clients are increasingly concerned about both their own and their heirs' abilities to rely upon governmental benefits to provide some minimum level of support. Estate plans are beginning to reflect these concerns.

The Restraint Continuum

The restraints that can be placed on inheritances might be perceived in terms of a "Restraint Continuum." See the diagram. On one end of the line lies an outright, fee simple disposition to the heirs, while at the other end lies an outright, unfettered contribution to the general fund of a charity. In between these two extremes lies a Restraint Continuum of techniques that include trust benefits, family partnerships, and non-voting business ownership.

The restraints are typically designed to accomplish a particular client goal (e.g., protecting a child in a bad marriage from the consequences of a divorce or financial abuse). The type of restraint, therefore, is a direct result of each client's unique concerns and goals. The fine tuning of the restraint in the development of the estate plan will reflect the particular values of the client and the tax ramifications. There are a number of reasons a client might be considering such restraints, including:

• Protecting a heir in a problem marriage
• Providing for a second spouse, while assuring that the client's descendants ultimately inherit the client's assets, not the second spouse's heirs or new spouse
• Protecting a handicapped or disabled heir
• Protecting heirs from the questionable judgment of their parents (e.g., an ex-spouse)
• Placing a gatekeeper on the inheritance of a known spendthrift.
• Creating incentives and opportunities for heirs, without supporting a lavish, unearned lifestyle
• Delaying distributions for young heirs.
• Influencing the behavior of heirs.
• Providing a safety net to future generations to replace the potential loss of governmental benefits.
• Keeping control of the family business in the hands of those operating the business, while still providing support to those outside the business.

The nature of the restraints in inheritance are a direct result of the client's goals. The constraints may be structured in a number of ways, including:

• Delaying benefits until a designated future date (e.g., when the child reaches age 30)
• Placing control of an inheritance in the hands of another decision maker (e.g., an irrevocable trust)
• Giving a third party the discretionary judgment to decide on distributions to an heir (e.g., using the subjective judgment of a trustee)
• Setting objective criteria for heirs to receive trust benefits (e.g., going to college)
• Limiting the right to benefit from part of an asset (e.g., through a family limited partnership).
• Denying rights to a part of an asset, such as future value of the asset (e.g., a charitable remainder trust)

Basic Parts of any Asset. Understanding restrained wealth planning is impossible without understanding the basic nature of an asset. Virtually every asset has four primary components which can be appropriately divided in the planning process. These components are:

• Control - Often the most important element to the client is the ability to control the asset. For example, even when he makes gifts to family members of company stock, a closely held business owner generally wants to retain control of the business decisions (e.g., to retain control of the payment of income and benefits, or employing family members). A general partner owning only a 2% interest in a family limited partnership may still control the operations of the partnership. The trustee of a generation skipping trust controls the trust, but may be prohibited from using trust assets for his or her personal benefit.
• Income - Allocating current income is an important element of the estate planning process. For example, the recipient of a CRAT has a right to annuity based income, but may not share in the current equity, or future appreciation. A GST trust may provide an income benefit to a spendthrift child, while restricting his or her ability to control the trust assets.
• Current Equity - The current equity value of the asset (i.e., what an owner would receive if the asset were sold) is the third element. While a general partner may control a family limited partnership with a 2% equity share, the vast majority of the partnership's current equity value is normally owned by the limited partners.
• Future Appreciation - The last element is the benefit of the future appreciation in the asset's value. A charitable lead trust may provide no benefits to heirs for years, but may eventually convey all of the future appreciation to them.
  

The proper division of these four basic components lies at the core of virtually all planning strategies. If clients can understand these parts, they may make the difficult decisions that planning requires.

Virtually every estate planning technique has some built-in restraints on each of these parts. For example: although not the only technique available, trusts are probably the most used wealth restraint technique. By nature, any inheritance through a trust is a restrained inheritance. In 1997, the IRS noted that more trust income tax returns were being prepared than corporate income tax returns [5]. This statistic pointed out that clients were increasingly using trusts as a mechanism to place restraints on the transfer of wealth.

A discussion of all of the possible mechanisms to restrain an inheritance is beyond the scope of this article. What is important is for planners to begin to emphasize not only the tax savings techniques available, but also the restraint aspects of commonly used techniques.

The Restraint Continuum Table. Attached to the end of this article is a table which summarizes the various levels of constraints which can exist in many common planning techniques. Note that the focus of this article and the table is not on the tax component of the technique, but rather the restraint component. In addition, the table is not designed to deal with every contingency that can be built into a planning technique. Instead, it focuses on the normal pattern of technique. To be workable, the table over-simplifies the restraint options available with each planning technique. Note that as you move down the table, the restraints tend to become more restrictive.

In order to understand the table, it is necessary to understand the terms used in preparing the table. The table looks at rights from the standpoint of the current beneficial rights of an heir. It does not focus on the rights of other potential heirs, such as a vested or contingent remainderman.

• "Granted" means that the technique gives a current benefit to such right to the heir.
• "Limited" means that the current benefit of the right is restricted in some manner. The right may be limited in an objective or subjective manner.
• "Delayed" means that any current right to the benefit is delayed, but, in the future, the benefit will be provided in some manner. In many cases, the delay is a time based delay (e.g., a beneficiary reaching age 35).
• "Discretionary" means that the subjective judgment of someone other than the heir will decide how the heir receives the current benefits from the right.
• "Denied" means the heir will never have any benefit from this particular asset right.

Adding Balance and Flexibility

By necessity, the concept of a restrained inheritance must include a discussion of how balance can be brought into the overall plan. While restraining the inheritance may make sense, giving unbridled power to a third party could be just as damaging and often the client wants to give some counter-balancing power to heirs. The document should also create flexibility in the plan. [6] Some of the options are:

Business Interests. The parent/business owner often wants to assure that control of the family business rests in the hands of the operators of the business, not outside family members who may be prone to making cash demands. However, protecting a minority owner or limited partner from the excessive actions of the controller of the business is also a frequent concern. To reduce this risk, the documents could grant counter-balancing rights to the outsiders (e.g., "if dividends of less than X are paid over three years, then my the non-voting shareholders shall have the right to put their stock back to the company at a value determined..." or "...a sale of substantially all of the assets of the company must be approved by a majority of all classes of stock ownership...and shall result in a requirement of a subsequent liquidation of the company on the following terms...") . In the alternative, an agreement might convert an outsider's non-voting equity interest to a voting right if certain events occur. A flow through entity (e.g., an S corporation, partnership or LLC) might be required to distribute enough of the allocated taxable income to allow owners to pay their taxes.

Trust Terms. There are a number of flexible trust terms that the client should consider having in any trust. These include:

• Discretionary Authority. The nature of trustee discretionary authority is flexibility - assuming the trustee's subjective judgment is to be trusted. If a client is concerned about the trustee's subjective determinations, two principal options are available. First, the trustee can appoint Co-trustees and rely upon the combined subjective judgment of the Co-trustees. Second, the client can adopt an ascertainable standard [7] (e.g., "provide for the health, education and maintenance of my children in their accustomed manner of living, taking into account other resources available to them in the knowledge of the trustee"). However, the use of an ascertainable standard can raise fiduciary liability issues for trustees. For example, if a child needs a car, should a new BMW or used Volkswagen be acquired? Because the trustee must interpret the standard in deciding on distributions, some degree of discretionary authority remains. To protect the trustee, the trust agreement might indemnify the trustee for actions taken in good faith.
• Spray Powers. Particularly where there are minor children facing future college education costs or needy family members, a non-marital irrevocable trust can allow the trustee to distribute income to beneficiaries in the trustee's discretion. Thus, the descendant's or elderly parent's lower income bracket can yield greater after-tax income (e.g., the beneficiary is in a lower income tax bracket) to fund a college education or family need. The same idea can apply to principal distributions.
• Communication. The failure to communicate is a common source of fiduciary conflict [8]. The trust instrument should provide for standards of communication that the trustee is required to observe. For example, the trust instrument may provide that quarterly financial statements must be provided to adult beneficiaries and/or the parent/guardian of minor beneficiaries. If the client want to restrict the access of heirs to the trust's terms, the document should provide for both such restrictions and a process by which such restrictions can be removed.
• Trustee Removal. Subject to certain restrictions, both the grantor and beneficiaries can hold the right to remove and substitute trustees without cause [9]. Properly drafted, such a power is not considered a power of appointment which would pull the assets into the grantor's or beneficiary's estate. Giving a majority of the adult beneficiaries the ability to remove and substitute a trustee can avoid a legal fight if the trustee does not perform properly. However, to protect against arbitrary action, it might be appropriate to require approval from the remaining trustees, and/or a super-majority (e.g., 66-80% percent) of the adult beneficiaries.
• Trustee Removal - With Cause. If the trust grantor may allow for removal of trustees for cause. PLR 9303018 and 9328015 provide 13 causes for removal. If the trustee is removed for cause, the removing parties may be able to appoint a related or subordinate party as a substituted trustee.
• Successor Trustees. Particularly where the trust is expected to have a lengthy existence (e.g., a Dynasty Trust), the trust agreement must document how successor trustees are chosen. A selection process might include one or more of the following:
  • Allowing a surviving spouse to choose the successor trustee.
  • Allowing a majority or a super-majority of the adult beneficiaries to appoint a successor trustee.
  • Allowing the last named Trustees to choose their successors.
  • Allowing the last named Trustees to choose their successors, with the approval of a majority of the beneficiaries and/or remaining Co-Trustees.
  • Allowing the remaining Co-Trustees to choose the successor.
  • Allowing the remaining Co-Trustees to choose the successor, with the approval of a majority of the beneficiaries.
  • Giving a third party (e.g., local probate court) the authority to select a successor trustee. This is not generally the best approach, but should be a fall-back if all others fail (e.g., due to family squabbling).
• Powers of Appointment. Granting a person a "Limited Power of Appointment" can provide significant flexibility to the planning process [10]. For example, a client creates a lifetime unified credit trust for the benefit of his wife and minor children. He is concerned that the trust has no flexibility to deal with issues which may exist when his children are older (e.g., they develop alcohol or drug problems). The spouse could be given a limited power of appointment to reconfigure the trust for the benefit of the grantor's descendants at any time before the spouse's death - adding flexibility to the plan. As a further example, a client who creates a Dynasty Trust may want to grant each generation, at its death, the ability to reconfigure the terms of the trust for the benefit of the next generation.
• Spendthrift Trusts. A spendthrift trust [11] provides for two major restrictions. First, it restricts the ability of any beneficiary to assign or otherwise transfer his or her interest in the trust. In most states a trust right is freely assigned by the beneficiary (e.g., as collateral for loans or for other personal purposes). Second, a spendthrift trust restricts the right of creditors of a beneficiary to demand payment of income or principal to satisfy the obligations of the beneficiary. Virtually every trust should have spendthrift provisions which restrict the right of creditors to demand payments from the trustee to pay the debts or obligations of a beneficiary.
• Delegating Responsibility. The trustees may be given the authority to hire a third party (e.g., a trust department) to handle certain administrative functions [12]. The trust instrument may also provide that Co-Trustees can grant each other the right to make certain decisions. Because of fiduciary liability issues, such delegated powers may only cover routine administrative decisions.
• Domicile. Provisions in the trust instrument can allow the trustees (perhaps with approval of a majority of the adult beneficiaries) to move the state of domicile of the trust (for example, if local tax laws change) and change the governing law for the trust. Other states may offer more attractive tax or trust management opportunities.
• Modifications. Provisions can be placed in the trust to allow for future non-disposition revisions of the trust instrument. Thus, if there are important changes in the law 50 or 100 years from now, a Dynasty Trust may be modified to account for such changes. These modifications might be made only by the unanimous decision of the trustees and the trust instrument might require approval of adult beneficiaries.
• Supplemental Needs. A non-marital trust instrument may provide that any benefits to beneficiaries supplement any governmental program or other sources available to the beneficiary. The goal is to avoid using trust assets to the extent governmental or private funds are available to provide needed funds.
• Consumer Price Index. Because inflation will erode the benefit of any benefit which is expressed in current dollars, benefits set in today's dollars (e.g., "provide $5,000 annually to each grandchild attending college on a full time basis") may be increased by the Consumer Price Index (CPI) or similar index.
• Trust Division. One concern with a Dynasty Trust is that as you move through successive generations, the descendants have less and less association with each other. To combat this problem some Dynasty Trusts divide the trust into separate sub-shares as each generation dies so that each family group has its own trust fund. Dynasty Trusts might allow use of a limited power of appointment to sub-divide the trust into sub-shares for each family group [13].
• Termination of the Trust. In the future, there may be valid grounds for not continuing the trust. In some cases the Trustees by unanimous approval and possibly the approval of a majority of the adult beneficiaries might be able to terminate the trust. The critical issue in any termination is how the funds will be distributed at termination.

Conflict Minimization

Placing restraints on an heir's inheritance is bound to create conflicts, if for no other reason than that the heir wants the money - NOW! A critical part of the drafting process is to draft provisions which minimize the potential sources of conflict. Certainly the use of balancing rights and flexible provisions like those discussed above may help minimize some conflicts. Among the other possible provisions are:

Trustee Selection. As discussed above, the choice of the correct trustee is critical. The trustees who are chosen (both originally appointed and successors) should be appointed with an eye on the potential conflicts of interest. For example, appointing as trustee of a marital trust a child who resents his stepmother is probably not a good idea.

We typically recommend that the trustees not be the guardians of minor beneficiaries. This removes an inherent conflict of interest of a guardian/trustee being accused by a dissatisfied heir of mismanaging the family assets by making distributions that indirectly benefited the trustee/guardian.

Perhaps one of the most difficult questions for many clients is the choice of who will provide long term management of the family assets and decide on distributions. Instead of immediately documenting the client's choices, advisors need to focus the attention of the client on the capabilities and character of the proposed trustee. What real or perceived conflicts of interest exist? Co-trustees can be used so that a person with some, but not all the necessary characteristics can be blended with a trustee who has other characteristics. For example, it often makes sense to use a family member as co-trustee to mentor the children in financial responsibility, while also having an institutional co-trustee to manage the investment and administration of the trust [14].

Institutional trustees are often a concern to clients. To minimize this concern, provide that either co-trustees or adult beneficiaries can remove an institutional trustee at any time without cause and appoint a replacement institutional trustee. It may also make sense to provide in the document that any individual trustees can appoint as a co-trustee or as a non-trustee an institutional party to provide investment at administrative functions.

Contemplation of Divorce. Whenever an irrevocable trust is established during a married grantor's life, make sure it contemplates the possibility of grantor's divorce. But beware of not violating the rules on martial gift tax deductions. To protect the grantor, the document might provide:

• The divorce or legal separation automatically terminates any beneficial rights the spouse has under the trust instrument, excluding a martial trust;
• Results in the automatic termination of the spouse's appointment as a trustee of the trust;
• Results in the automatic termination of any right the spouse has to remove and/or replace a trustee; and
• Allows the trustee to hold the income of the trust or expend income or principal as the trustee deems appropriate, without having to pay to the guardian (e.g., the ex-spouse) of any minor children.

The document should also contemplate what happens when a beneficiary gets divorced and should restrict the potential claims of the divorcing spouse.

Beneficiary's Spouse and Parents. Any trust instrument should contemplate the impact of an heirs divorce or marriage. For example, many trusts eliminate any right a divorced spouse has to receive benefits from the trust. But what if a medical emergency occurs to a descendant's sole surviving, non-blood parent (e.g., the surviving, divorced custodial parent of a minor grandchild)? That crisis is a family problem. The trust may provide for help to the ex-spouse in this type of family emergency.

Conflict Resolution. The longer a trust exists and the greater the value of it's assets, the greater the likelihood of a conflict developing between the trustees and beneficiaries. One method of minimizing the conflict may be to require that disputes be settled pursuant to alternative dispute resolution - either mediation or arbitration. While it is unclear whether such a mandate in the trust instrument would be legally binding upon a beneficiary who has not signed the instrument, it is certainly is a trust term that should be discussed with clients.

No-Contest Provisions. No-contest provisions [15] can serve as useful impediment to an heir or creditor who wants to pierce the spendthrift provisions of his or her trust or challenge the trust's existence. In addition, except in the case of a martial trust, the spendthrift provision can provide that the attempted assignment by a beneficiary of his or her trust benefits would automatically terminate the benefits. It creates a strong disincentive to challenge the trust's purposes. Some states do not permit no contest provisions.

Indemnification and Trustee Liability. What if the trust beneficiary is not challenging the existence of the trust, but instead challenges the trustee's exercise of discretion? The trust instrument could provide that a trustee is not legally liable to the trust or beneficiaries for actions taken in good faith. In addition, the trust instrument might indemnify a trustee for suits filed by beneficiaries and third parties, but only if the trustee's actions were taken in good faith.

Examples

A few examples may help. Harriet and Bob have a son who has shown incredible irresponsibility and laziness. They are convinced that if they pass an inheritance to their son, he would live off of it, until he dissipated it in meaningless dispersions. If a client believes another family member should, in effect, be gatekeeper for the son, the family assets might be placed in a family partnership or family business where the spendthrift child has no voting rights. Others could govern the investment and distribution decision for the child. A trust might be used to allow trustees decide how and when to make distributions to the child.

A client has a son who has some significant emotional issues and has historically been too trusting of others. The family wants to provide an ongoing income stream because of his limited earning capacity, but does not want to give the child control of the funds. A number of restraints are available, ranging from family partnerships to charitable uni-trusts. The choice of the particular type of restraint will be largely governed by other facts, such as the capability and advisability (e.g., conflict issues) of other family members to make decisions and whether or not there is a need to encroach upon the principal of a trust in the future (i.e. a charitable uni-trusts would not make sense).

A wealthy client has two children from his first wife who is deceased. He has five grandchildren. His current wife raised his children from the time they were very young, but did not adopt them. She has no children of her own and treats the children like her own. The husband is dying of cancer and does not want to use a QTIP trust for the benefit of his long-time spouse. However, if he gives her assets directly and she remarries and fails to redo her will, the new husband (as sole intestate heir) may receive all the assets he intended to pass to his children after her death. Effectively, the client may want the restraint to only be one of title and to grant as much authority to the spouse as possible.

Summary

Restraints on inheritance have always been a part of planning. What is new is the increasing focus on such restraints as a pivotal part of a client's estate plan. Planners will have to develop new and innovative ways of not only addressing these often unstated concerns, but also communicating solutions in an uncomplicated manner. The Restraint Continuum is a helpful tools for this perspective.

Does this mean that every inheritance should be restrained? Not at all. It is the client's personal goals that will determine the degree to which an inheritance should be restrained. Restrained transfers are just one part of the overall estate plan and not every client will want or need to adopt such an approach. Moreover, many clients will adopt the approach as a part of their overall estate plan, while also passing uninhibited inheritances to family members.

Do these techniques cure every estate issue? Absolutely not - no more than a family limited partnership is the best solution to every estate need. Perfection is beyond the grasp of any plan, but the Restraint Continuum provides one more arrow in the quiver of estate planning tools.

Is the attorney's role to be a mere scrivener of documents that reflect the bias and overarching control of the client(i.e., a moldy hand reaching out a worm-ridden grave)? If the goal of estate planning is to protect and preserve the family, all participants in the process have an affirmative responsibility to use their best efforts to accomplish that goal. Meekly acquiescing to restraints which are bound to create family conflict (e.g., "disinherit any family member who leaves my faith") is not an acceptable professional standard. One of the hardest struggles may not be the client's determinations. It may be the struggle of the advisor's own thoughts, concerns and biases.

But some pivotal questions remain unaddressed: Is it wise for a client to even consider placing restraints on inherited wealth? Will the restraints create more harm then good? Aren't these restraints just a client's ruling from the grave? The discussion of these largely philosophical issues are beyond the scope of this article, but are addressed in detail in articless Propect & Preserve Family Part I & II.

Author: John J. Scroggin, J.D., LL.M. is a graduate of the University of Florida law school and is a nationally recognized speaker and author. Mr. Scroggin has written over 220 published articles, outlines and books, including The Family Incentive TrustTM published by National Underwriter.

The Restraint Continuum

(normal benefits to a current individual beneficiary or owner)

Technique	Control	Income	Equity	Appreciation
Fee Simple Bequest or Gift	Granted	Granted	Granted	Granted
Mandatory Income Trusts
2503(c) Minor's Trust	Limited/Delayed	Granted	Limited/Delayed	Limited/Delayed
Staggered Principal Payout	Limited/Delayed	Granted	Limited/Delayed	Limited/Delayed
Q-TIP Marital Trust	Limited/Denied	Granted	Limited/Denied	Limited/Denied
Total Return Trust	Limited/Denied	Granted/Limited	Limited/ Delayed/ Denied	Limited/ Delayed/ Denied
GST   for 1 Generation	Limited/Denied	Granted Discretionary	Limited/Denied	Limited/Denied
Dynasty Trust	Limited/Denied	Granted Discretionary	Limited/Denied	Limited/Denied
Discretionary Trusts
Staggered Principal Payout	Limited/Delayed	Granted Discretionary	Limited/Delayed	Limited/Delayed
GST   for 1 Generation	Limited/Denied	Discretionary	Discretionary	Limited/Denied
Dynasty Trust	Limited/Denied	Discretionary	Discretionary	Limited/Denied
Incentive Dynasty Trust	Limited/Denied	Limited Discretionary	Limited Discretionary	Limited/ Discretionary/ Denied
Ownership Restrictions (restraint on underlying assets)
Minority Ownership	Limited/Denied	Limited/Denied	Granted/Limited	Granted/Limited
Family Limited Partnerships	Limited/Denied	Limited/Denied	Granted/Limited	Granted/Limited
Non-Voting Ownership	Limited/Denied	Limited/Denied	Granted/Limited	Granted/Limited
Pre-Nuptial & Post Nuptial	Denied	Limited/Denied	Limited/Denied	Denied
Charitable Transfers
Charitable Lead Trust	Limited	Denied (except charity)	Delayed	Delayed
Charitable Remainder Annuity Trust	Limited	Granted/Limited	Limited/Denied	Limited/Denied
Charitable Remainder Uni-Trust	Limited	Granted/Limited	Limited/Denied	Limited/Denied
Supporting Organization	Limited	Limited/Denied	Denied	Denied
Private Foundation	Limited	Limited/Denied	Denied	Denied
Donor Directed Fund	Limited	Denied	Denied	Denied
Direct Charitable Gift	Denied	Denied	Denied	Denied

Note: To be workable, the table over-simplifies the restraint options available with each planning technique.

[1] c.f., "Should You Leave it To Your Children." Fortune, September 29, 1986; "The Perils of Family Money," Forbes, June 19, 1995; "The Market Value of Family Values," Cato Journal (Winter 1997); "The Disinheritors," Forbes, May 19, 1997; "Inheritance and Sloth," Forbes, October 11, 1999; "Family Feuds, Financial Planning, November 1999. [2] The lowest estimate came from a study by Avery & Rendall, "Inheritance and Wealth," Presented to the Philanthropy Roundtable, November 1993 which estimated that $10.365 trillion would pass by the year 2040. [3] The newest estimate came from Boston College researcher Paul Schervish and covers a larger period. He estimates that, by the year 2050, between $41 and 136 trillion will have passed. See the New York Times, October 20, 1999. [4] A Portrait of the Affluent in America Today, U.S. Trust, 1999. [5] Tax Practice, June 16, 1997. [6] Barry A. Nelson & Rosario F. Carr, "Drafting to Achieve Maximum Flexibility in the Estate Plan", Est. Plan., July 1998; Alan S. Acker, "Every Drafter's Dream: The Flexible Irrevocable Trust", BNA Tax Memorandum, 1998, at 295; Neill G Keydel & Frederick R. McBryde, "Building Flexibility in Estate Planning Documents", Tr. & Est., Jan. 1996. [7] Ted Englebrecht and Jill Lockwood, "Planning for Ascertainable Standards Under Code Section 2041," Journal of Financial Planning, May 2001. [8] Jo Ann Engelhardt & Robert Whitman, "Administration with Attitude: When to Talk, When to Walk," 16 ABA Probate & Property at 12 (May/June 2002). [9]Revenue Ruling 95-58, 1995-2 CB 91; Robert C. Pomeroy, "Trustee Removal and Replacement Powers," ALI-ABA Est. Plan. Course Materials J., April 1999. [10] William S. Forsberg, "Special Powers of Appointment: The Key to Flexibility in Planning," Est. Plan., Jan. 2000. [11] Tax Planning for Family Wealth Transfers, WG&L, section 7.05 [1]. [12] Iris J. Goodwin & Pierce McDowell, "Delegating Responsibility: Trustees Explore the Once Taboo", Tr. & Est., March 1999. [13] c.f., Renee M. Raithel, Avoiding Tax Pitfalls and Family Conflicts When a Child is Trustee, Est. Plan, June 1998. [14]Elizabeth L. Mathieu, "How to Choose and Evaluate a Corporate Trustee for Long Term Trusts," Est. Plan, Feb. 2000. [15] Raithel, Drafting Estate Planning Provisions to Avoid Litigation, Estate Planning, February 2000; "No Contest Clauses in California Will and Trusts," 18 Whittier L. Rev., 613-633, 1997. [16] See also, John J. Scroggin, "Protecting and Preserving the Family - The True Goal of Estate Planning, Part I: Reasons and Philosophy," 16 Probate and Property, at 29 (May/June 2002).

Estate Planning - Influencing Heirs Providing Non-Binding Information Influence Behavior The Restraint Continuum *Also see Resources - Wealth & Family *Also see Innovative Planning - Protect & Preserve Family *Also see Changing Nature of Estate Planning - Influencing the Legacy

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