Results Oriented Trust Environment – ROTE™
The way it’s been:
If you are a parent, are you concerned that inherited wealth will have a negative effect on your children’s attitude towards money and even undermine their incentive to accomplish constructive life goals? If you are an advisor, how do you respond constructively when clients share these concerns with you?
A common approach in the past has been an “incentive trust” in which distributions to children are tied to accomplishing specific objectives, such as graduation from college or full time employment. However, repeated studies over the last fifty years have shown that such an approach is unlikely to achieve the real goal: the emergence of fulfilled, financially responsible adults who enjoy a healthy relationship with money.
The way it can be
After much research and study, we are pleased to offer parents and advisors a better way to use trusts to help children and grandchildren become financially responsible adults: the Results Oriented Trust Environment, or ROTE™, which we developed with our colleague in Boston, Jim Grubman, Ph.D.
How ROTE™ Works
We have used ROTE™ to create the Financial Skills Trust, which helps beneficiaries master seven interrelated, primary financial skills fundamental to responsible money management
- The ability to live within one’s means, i.e., not spending more than one’s income.
- The ability to save a portion of one’s income.
- The ability to avoid excessive debt.
- The ability to maintain reasonable accounting of one’s financial resources.
- The ability to understand and manage one’s financial assets, either using basic investment principles or delegating this responsibility to appropriate advisors.
- The ability to get and hold a job if funds in addition to trust distributions are either required or desired.
- The ability to use a portion of one’s income and/or financial resources to support charitable activities.
We work with families and their estate planning attorneys to help them incorporate the ROTE™ based Financial Skills Trust into existing estate plans.
As part of the estate plan, we offer high-quality video recordings in which parents and grandparents personally express their hopes and wishes for their children, grandchildren and other descendants and discuss the role that financial literacy has played in their family. The resulting DVD becomes a meaningful and compelling legacy.
Focused more on love and support than on control, the Financial Skills Trust respects the young adult’s independence and development. Using ROTE™ greatly increases the likelihood that the next generation will become responsible money managers.
We developed ROTE™ with Jim Grubman, Ph.D. Jim’s website is www.jamesgrubman.com.
