“Your legacy differs from your estate, in that it represents more than the things you own—it embodies your purpose. At the end of your life, your legacy will be the imprint you leave on this earth and the meaning your life leaves behind.”

Forbes' recent article, “Why You Should Consider Using a 'Purpose' Trust for Your Legacy Plan,”suggests using a “purpose” trust to protect, preserve, and continue to celebrate your legacy.

A purpose trust is a trust that exists to carry out a purpose, rather than a trust that exists for the benefit of individual beneficiaries. Several states now have laws permitting purpose trusts. You must be sure that the trust exists for a “valid” purpose.

Three common goals of legacy planning are perpetual existence; separating the principal of the legacy assets from the revenue those assets generate; and separating the management and control of the legacy assets from those who benefit economically. A purpose trust can accomplish all of these goals.

Many states–such as Delaware, South Dakota, Nevada and Wyoming–now allow “perpetual” trusts. These trusts can last forever or for an extraordinarily long period of time, like 1,000 years.

Separating the principal of the legacy assets from the revenue those assets produce and separating the management and control of the legacy assets from those who benefit economically, can be achieved by creating up a multi-tiered trust structure.

While your purpose trust can own the legacy assets through a corporate entity, the legacy trust can provide that all of the income received be paid to one or more traditional family dynasty trusts of which your family can be beneficiaries. This lets your family or other beneficiaries benefit economically from your legacy assets, without necessarily involving them in the management and control of those assets. By creating a separate vertical for the management and control of your legacy assets, you also allow yourself to be intentional with the succession of that management and control and to integrate family members or outside advisors who are best qualified to oversee your legacy.

In a traditional dynasty trust structure, the ever-increasing pool of potential beneficiaries is a big issue. Even if you create maximum protections for the trustees and give them complete discretion as to how and when (if at all) to make distributions to beneficiaries, the trustees of the traditional dynasty trust still have fiduciary duties to those beneficiaries. As a result, the beneficiaries can file a lawsuit against the trustees, which can pressure trustees or frustrate the system, which may wreak havoc with your legacy plan.

With a “purpose” trust there are no beneficiaries, so the trustees don't owe a fiduciary duty and don't need to worry about lawsuits. With a purpose trust, you appoint someone (also known as a “protector” or “enforcer”) who will ensure that the purpose of the trust is being fulfilled. The trustees are free to focus on carrying out your legacy plan as you wanted.