Adult Education


By and large, Americans are a rather independent lot. Our front-page article reviews some fundamental threats to our personal independence in the context of young adult Americans. You will want to share this article with the young adults in your life.

Americans cherish their personal independence. Each of us has the freedom and responsibility to make our own personal, health care and financial decisions upon reaching adulthood (i.e., age 18 in most states). If you have loved ones who are young adults, or soon will be, then you should share this article with them. We will review some fundamental threats to personal independence encountered by young adult Americans.


The print and electronic media remind us that life can take some rather unexpected and unpleasant turns. From automobile accidents to tornados, people often are seriously injured. Aside from injuries, however, many people are incapacitated due to various illnesses, even though reports of their suffering rarely make the evening news. The threat of incapacity looms over us all, without playing favorites. And for some the incapacity is permanent.

Whatever the cause, incapaci­tated Americans may lose more than the ability to care for them­selves. In the absence of proper legal planning, they also lose the ability to select their own backup decision-makers for personal, health care and financial matters. By default, a court may make that selection after a legal process that employs at least three lawyers, can cost thousands of dollars and may expose private personal and financial information to the public record. Thereafter, the backup decision-maker selected by the court will remain under its supervision, further adding to the ongoing expense and red tape. Truly, an ounce of legal prevention is worth a pound of legal cure.


Single, young adults are immortal. At least according to the images promoted by the advertising wizards on Madison Avenue and the entertainment gurus in Hollywood. A more realistic picture of youthful immortality, however, can be found in the obituary section of your local newspaper. For a variety of reasons, young adult Americans should consider acquiring permanent life insurance as part of their long-term financial plan.

The best time to secure a permanent life insurance policy is at the earliest insurable age. When it comes to life insurance, health actually buys the policy and money merely pays the premiums. And premiums generally are lower the younger the insured. However, injuries and illnesses can cause even a young adult to be rated (e.g., paying more for the insurance due to less than average health) or to be uninsurable. [Note: For these reasons, many forward-thinking parents acquire permanent life insurance on their minor children to guarantee later insurability for their children as adults, as well as to pay funeral expenses should death arrive prematurely.]

In addition, permanent life insurance can build equity within the policy contract on a tax-advantaged basis, making it available in the future for personal financial independence through withdrawals or loans. Once the young adult marries, the death benefit feature of the policy can provide valuable financial security for their family. This could make a radical difference in the quality of life for the loved ones they leave behind.

Special Needs

Parents of children with special needs face unique challenges in providing for the daily special needs of such a child while both parents are alive. But even more challenging may be providing for adult children with special needs after the parents are deceased.

An inheritance, properly structured and protected, can help provide an essential financial safety net to help ensure their future personal independence. Many parents choose to purchase life insurance for this purpose.

Nevertheless, special legal planning is required to protect the inheritance of a young adult with special needs, their access to important assistance programs and the potential future needs of other family members. Careful planning may enable the inheritance to comply with the letter and the spirit of various rules governing eligibility.

Bottom line: It is never too early to ensure the financial and legal security of the next generation.


Whenever someone lacking financial maturity receives an outright inheritance, it is typically good news for sports car (usually red in color) salespeople, travel agents and high-end electronics dealers. [Note: Some have termed this Affluenza.] Is that how you want your hard-earned wealth consumed? And what about the potential long-term damage to your heirs?

One increasingly popular antidote to this dilemma (short of spending your kid’s inheritance, as the popular bumper sticker proclaims) is the Incentive Trust.

Incentive Trust  Antidote

As the name implies, an Incentive Trust is one in which the Trustmaker sets standards of conduct or achievement that must be met before distributions are made to or for the benefit of a beneficiary of the Incentive Trust. These standards may include such incentives as completing a certain educational level, becoming self-supporting through gainful employment, volunteering for charitable causes supported by the Trustmaker and even avoiding drug/alcohol abuse.

However, Incentive Trusts may not include provisions that are considered contrary to public policy. Such provisions include those that may disrupt family relationships by encouraging separation or divorce, foster neglect of parental responsibilities, prevent marriage or discourage the performance of public duties. Otherwise, the scope of permissible incentives is limited primarily by your creativity as the Trustmaker.

Communicate for Continuity

Effective communication of your Incentive Trust objectives can help prevent future litigation between your Trustee and your heirs, especially over the requirements you establish for distributions. Some families hold financial planning retreats for their intergenerational members to communicate the Trustmaker’s objectives. At these retreats, family members may prepare a written statement of their family values, a family code of conduct and/or a family mission statement. Oftentimes, the Trustmaker’s professional advisors attend the retreat and educate family members about the investment, tax and asset protection benefits of the Incentive Trust. This can help ensure the continuity of your philosophy of wealth accumulation, management and distribution for heirs.

Alternative Antidote

Perhaps you are opposed to influencing the behavior of your heirs after your death, but don’t want your wealth subject to their squandering, divorces, lawsuits or bankruptcies. If so, you should consider a Discretionary Trust. As the name implies, such a trust makes distributions only in the sole and absolute discretion of the Trustee. The key to a successful Discretionary Trust is selecting and entrusting an appropriate Trustee with broad discretionary authority to protect your wealth for and from your heirs. The non-fiduciary position of Trust Protector can be created to appoint and even remove such a Trustee to ensure fulfillment of your objectives.