Written

For

The

Australian

-

Trust

babies

show

awful

truth

of

easy

money

Would you swap your career for a lifetime of family trust distributions? Before you say yes, listen to Nigella Lawson, whose father Nigel was a Thatcher-era chancellor. Her verdict on inherited money: “It ruins people not having to earn money.”

I see this play out every week. Family trusts set up in the 70s and 80s by well-meaning parents – hard-working professionals from Toorak, Killara or Peppermint Grove – have created a generation of 30 and 40-somethings living semi-cushioned lives, drifting through their days with no fire in the belly. And here's the kicker: most of these families weren't mega-wealthy. They were upper-middle class parents who bought some property, accumulated a bit, and used a trust structure that, in hindsight, was deployed poorly.

Warren Buffett nailed it: leave your kids enough to do anything, but not enough to do nothing. Bill Gates gets it too – he's reportedly leaving each child around $US10 million out of a $US76 billion fortune.

So how do you avoid raising trust fund zombies? A few strategies I recommend:

- Ringfence what the money can be used for – school fees, a home deposit, business start-up capital – rather than open-ended cash.
- Appoint a professional trustee instead of handing the reins to your kids the moment you die.
- Stagger distributions across ages 20, 25 and 30, or delay control until 40.
- Link releases to results – finishing a degree, hitting career milestones, charity work.
- Invest the trust in an operating business that can't easily be liquidated, so the next generation actually has to show up.
- Provide life coaches and financial mentors alongside the money.

Money loses its magic quickly. You can only drive one car, live in one house, eat one meal at a time. The real question every parent with a trust needs to ask is whether they're building a dynasty or manufacturing a lifetime of problems for their kids.