An old man and his regret.

I was servicing a high net worth individual, and the subject was on the possibility of setting up a trust to minimise estate duty for the beneficiaries. He told me a recent story that happens in his social circle. A prominent businessman set up a trust for 3 of his children. When he retires at age 60 (25 years ago), he budgeted himself with $10 million to maintain himself and his wife. The trust, on the other hand, is worth in excess of $600 million, and the children (now in their 40s and 50s) receive $100,000 per month from the trust proceeds perpetually.

It looks good and happy. But lets take a look how this situation ends.

The old man lives into a ripe old age with medical problems. His $10 million has not kept up with the inflation (associated with his living standard). He requested the trustee of his children's trust to allow him to liquidate a small portion of the trust assets to pay his medical bills and live simply in the twilight of his life. The children (beneficiaries of the trust) objected. He laid down his pride and pleaded with his children. Again, they refused him. The relationship between father and children has since broken down. The old man developed a stroke and is now kept somewhere in the corner of an unknown hospital, counting his days.

"How much did he ask from the trust and his children?" I asked my client.

"$3,000 (yes, it is three thousand dollars) per month." Client told me.

Sometimes, in financial planning, we are so caught up with the numbers, tax rates, investment returns, that we fail to consider the fragility of life and relationship amongst people, that in the end can cause a bigger problem.

I learnt a great deal in this case about financial planning and human.