Inheriting travel: Trusts can fund trips for heirs
Leave money to your heirs and they might buy a car. Give travel as a bequest and they might expand their horizons, advocates say.
The Associated Press
Lee Liebman and her family took a $6,000 vacation this year that didn't cost them a dime, thanks to a relative's last wishes.
Whether it's trying to make sure that their children stay in touch despite geographical distances, or wanting them to become acquainted with family roots in another country, some people are deciding that travel should be a part of their legacy.
"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 he's set up 10 travel-related trusts in the past 15 years, while other clients have given instructions verbally or in a non-legal written "wish list."
The trend has even prompted a travel agency and a law firm to partner together this summer to start offering one-stop-shopping for trust creation and travel planning.
"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, who advises there may also be tax advantages to setting up a trust that encourages travel.
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 want their offspring to connect with their heritage, culture or religion. They might go so far as to 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.
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," Kestenbaum cautioned.
In Liebman's case, her in-laws realized 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.
At a family dinner in 2000, her father-in-law, an academic in his 60s, announced that once a year, he and his wife would pay up to $800 per passenger should one family be inclined to visit another, "and it will hold true even in the event that one of us passes away," Liebman recalled. Four years later, he died unexpectedly.
So far, the money has been used by his children for five family celebrations, three in Israel and two in the United States. The amount has been modified over the years to keep up with the rising cost of air travel. 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, Liebman, her husband, and their three children flew from the East Coast to Israel for a wedding and received a check to cover their flights.
"Because it was free that was a big incentive to do it," said Liebman, who works in the health care industry. "Sure, we could have come up with $6,000 somehow, but we wouldn't have. None of us is wealthy. "
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.
"They are thinking about how to influence the behavior of their descendants in a positive way," he said, noting that often, family members don't know what has been set up in the will or trust until after their relative's death.
For 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.