Wednesday, June 29, 2016
Parents care about their children’s financial future, but it is also important to think about a child’s emotional future. So, what if parents thought about the capital they spend on their young children as assets for an “emotional trust fund.” If parents think in financial terms, it could make a difference in their children leading meaningful lives, regardless of any money they inherit. An emotional trust fund is similar to a regular trust, but how the assets are invested is what counts.
Looking at the different components of a trust, a parent is able to shape how their children are raised. Think of a nanny as stocks, their influence on children makes for a bright future, and you would never invest in a nanny or stock you thought would underperform. The parents in this scenario need to be respectful trustees when dealing with their nannies. Next, think of enrichment activities as bonds, focusing on how these activities are benefiting your child. Also, consider how you spend time with your children, this is the cash in your emotional trust fund, and you must consider how you will spend it. With emotional trust funds, parents cannot only reframe their children’s future with money but emotional security, too.
See Paul Sullivan, Investing in an Emotional Trust Fund for Your Children, NY Times, June 24, 2016.
Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.