29th November 2012 at 10:50am
The will of Andrew Carnegie
This isn’t as strange a question as you might think. I was reading the Will of Andrew Carnegie recently. He founded the library which fed my bookworm habit as a child.
It was a fascinating snapshot of the priorities and social context around the entrepreneur, who died in 1919.
There were pages and pages of legacies. And in a time well before pensions were mandatory or mainstream, he created annuities for many employees in his Will.
He was also explicit about why some people were included in his Will. A few were listed as “lifelong friend”. Some legacies to employees acknowledged 25 years of loyal service. And he said this of a small group of named employees: “These four are as members of the family”.
He didn’t leave anything to his daughter, Margaret. Instead, he explained that in earlier years he had provided for her by giving significant funds to his wife. And he was trusting his wife to now decide how to pass on funds to Margaret, with the comment “being unable to judge at present what provision for our daughter will best promote her happiness, I leave to her mother the duty of providing for her as her mother deems best. A mother’s love will be the best guide.”
It reminded me of one of the reasons why people use trusts today. To control their legacy.
Who do you trust?
Let’s say someone has young grandchildren. It may be many years before education costs kick in, or a deposit is needed to help someone onto the housing ladder. Without a crystal ball, who knows? And temptation might trump common sense if the youngsters get the money too soon.
That’s where a trust comes in. Trusts allow people to ringfence assets for the benefit of others. But access can be controlled by the trustees, who can decide who gets what, when and how (depending on how the trust is written).
So trusts buy time to make better decisions on how wealth is passed on. The person setting-up the trust creates the framework, and leaves final decisions to be taken years or decades into the future. This gives great flexibility. And factors can be taken into account which might not have been known all those years earlier, when the trust was first set up.
And I’ve not mentioned divorce – perhaps the biggest social change affecting how family wealth is inherited since Andrew Carnegie’s time. Would you leave everything to your spouse in the hope that they would pass it on in line with your wishes? What if you’ve remarried and want children from your first marriage to benefit? Or what if you’re concerned about your child’s choice of partner and want to protect their position?
You might want to use a trust – control beyond the grave.
For more information on the trusts available with Standard Life’s savings and investment solutions, see our Customer brochure.