What Can Be Done When Tangled Trusts Do More Harm Than Good?

Meet the Family: The Clarke* family’s founder, now deceased, built the family wealth by inventing a part to accelerate assembly line production. The founder’s son was the current patriarch of the family, which also included an unmarried daughter, the son’s three adult children and their families.

The Challenge: Over three generations, the number and complexity of the family’s trusts had become unwieldy. To complicate matters further, a flaw in their trust structure (beneficiaries also served as trustees) put the family at risk of future estate taxes. Family dynamics were another sensitive issue. The patriarch wanted his children to carry on the entrepreneurial legacy but not all had that passion, and there were no clear family roles for the third generation.

Pitcairn’s Solution: Initially, we streamlined the trusts from 80 to 27, implemented compliance best practices to prevent future trust issues, and helped the third generation define appropriate roles for themselves. Later, when the second-generation patriarch died, we set up new trusts along family lines to permit separate investment policies and increase autonomy. Ultimately, we became the successor family office and over our 20-year relationship helped to add governance structures, improve family communications, and develop learning plans for the fourth generation.

The Family’s Response: By the numbers, the family saw significant cost savings and reduced risk due to the improved trust structure. Emotionally, they benefited from better communications and defined family roles. In fact, the second-generation patriarch was quite emotional when he thanked us for accomplishing something he had desired for 30 years.

*The family name has been changed.