A new car, or priceless memories How more parents are leaving behind travel trust funds instead of an inheritance
19:11 GMT, 14 August 2012
Instead of leaving behind a big inheritance, people are now choosing to create travel trusts, with their last wishes stipulated in geographical terms.
Whether it's parents wanting their offspring to connect with their heritage, culture or religion, people are increasingly deciding that travel should be a part of their legacy.
'You could give them money and they
could go and buy a new car with it, or you could give them this and they
can use it to create memories,' said Jim Bendt, president of Travel
Beyond of Minneapolis.
Spending the inheritance: People are wanting their offspring to connect with their heritage, culture or religion, instead of receiving a big lump sum
Lee Liebman, who was left a travel trust fund, took her family on a $6,000 vacation this year that didn't cost them a dime, thanks to a relative's last wishes.
'Despite the economy, this is the first generation of people passing away with substantial wealth,' said Avi Kestenbaum, a trust and estate specialist with the New York-based law firm Meltzer Lippe Goldstein & Breistone.
He estimated that he has set up ten travel-related trusts in the past 15 years, while many other clients have given instructions verbally or in a non-legal written 'wish list.'
Margaret Cronin, a partner with the law
firm, Leonard, Street and Deinard, also of Minneapolis, said these
trusts might provide other benefits as well.
'If you give a child a big inheritance
outright, it's exposed to their creditors, to their divorces,' she said.
A trust is 'absolutely something that people should consider.'
Some who bequeath money for travel do so to ensure their children stay in touch despite distances, or become acquainted with family roots in another country.
They might also require the beneficiary to study or take courses in a particular country. Other trusts encourage travel with a philanthropic twist; for instance, the inheritance would need to be used for volunteer work in Africa.
'You could give them money and they
could go and buy a new car with it, or you could create memories'
Mr Kestenbaum said one client he had specified Greece as a destination, while another identified a particular town in Italy.
'The creator (of the trust) has to be
a little bit mindful or careful not to make it too rigid or too broad
either,' he cautioned.
Mrs Liebman's case, her in-laws realised that with two daughters living
in Israel and one son in the United States, the cost of plane tickets
might prevent his children and grandchildren from visiting one another.
a family dinner in 2000, her father-in-law, an academic in his sixties,
announced that once a year, he and his wife would pay up to $800 per
passenger if one family visited the other.
Four years later, he died unexpectedly, and so far, the money has been used by his children for five family celebrations, three in Israel and two in the United States.
Travel trust routes: The trend has prompted a travel agency and a law firm to partner together, offering one-stop-shopping for trust creation and travel planning
The amount has been modified over the years to keep up with the rising cost of air travel.
Mrs Liebman's mother-in-law, who dispenses the money, keeps it informal and doesn't ask for receipts, and she has covered the cost of a hotel when it was directly related to a family visit.
Most recently, Mrs Liebman, who works in the health care industry, her husband, and their three children flew from the East Coast to Israel for a wedding and received a check to cover their flights.
She said: 'Sure, we could have come up with $6,000 somehow, but we wouldn't have. None of us is wealthy.'
Mr Kestenbaum said parents and grandparents still want to provide for basic needs, but beyond that, he believes those with extra means are becoming increasingly philosophical in their estate planning.
He added that often, family members don't know what has been set up in the will or trust until after their relative's death.
'They are thinking about how to influence the behavior of their descendants in a positive way,' he said.
For Mrs Liebman, the money from her late father-in-law has had a very positive effect.
In the past dozen years, the family has expanded through weddings and babies, and the interaction and shared experiences at the family get-togethers means, 'there has been a new level of connection made.'
'It was really money well spent,' she said.