A Little Trust Is All You Need

by Kelly on August 1st, 2005

Talk about a walking advertisement for trust law… A German man won almost $1 million in the lottery and promptly spent most of it. Embarrassed, he turned to burglary rather than confess to the welfare office that he had no winnings left. He has now admitted to at least 60 offenses.

Totally unbelievable? Not really. While working in New Jersey, I had a client who, in addition to her mother’s estate, was the recipient of some medical malpractice money. While planning for the mother’s death, we implored the mother to put the money in a trust for the benefit of her daughter (and her daughter’s at that time, three children). She only consented to putting the insurance proceeds in a trust. The rest, over $1 million, went outright to the daughter. Two years later, the daughter was facing bankruptcy and was applying for welfare for her many children. She had spent the money on such luxuries as new bedroom suites for each of the children every year, cruises for the entire family and pay per view movies (including boxing matches at $40-50/pop). She basically frittered away more than $1 million on silliness. And now, her children have no college funds and a fairly bleak future.

The moral of these stories? Not everyone can handle money (though most of us would sure like to give it a whirl). A trust can be the difference between living well and living beyond your means.