The Beneficiary Primer: Rights, Responsibilities, and Realities a Conversation with Patricia Angus

Patricia Angus is CEO, Angus Advisory Group LLC & Managing Director of the Global Family Enterprise Program and Faculty Director of Enterprising Families Executive Education at Columbia Business School. A recognized thought leader in multi-generational family governance and wealth, she has advised families with businesses, trusts, and charitable foundations for more than 25 years. She currently divides her time among teaching, consulting, and writing.  Her publications include The Trustee Primer and The Beneficiary Primer, along with dozens of articles on family enterprise, wealth, philanthropy, and the social contract.

Kirby Rosplock

Welcome to the Tamarind Learning podcast. I'm your host, Dr. Kirby Rosplock, and today we're talking about the Beneficiary Primer with Patricia Angus, who is an attorney, a former practicing attorney, long tenured career in the wealth advising space. And now she's actually been at Columbia for several years. And she holds many different titles from Adjunct Professor to Managing Director of the Global Family enterprise program. She's also the Faculty Director of the Enterprising Family Executive Education program. So we are really excited to have you here today, Patricia, and to talk more about The Beneficiary Primer.

Patricia Angus

Great to be here, Kirby. One of my favorite topics, and it's always good to be back in touch.

Kirby Rosplock

So I am so curious, what inspired you to write the Beneficiary Primer? Because there are so many great resources out there, but I've never seen anything like this book. So I'm really excited to learn more about your inspiration, what the book covers, and just generally, who Can you read it?

Patricia Angus

It's funny, Kirby. The book came out just a month or two ago in, I guess it was December 2020/January 2021. However, I started writing it more than 20 years ago. And the reason I wrote it was that I was a young trust and estate lawyer, and I was working with many beneficiaries of family trusts. And what I found was there was a lot of work that was going into creating trust. And I was working literally all hours of day or night. I remember one New Year's Eve, my friends were heading off to parties, and I was still finishing that last trust that had to be done by midnight, December 31st, whatever year it was. And I said, But this is crazy. We're working very hard. And then I meet with beneficiaries. They don't know what a trust is. They don't know what's in their trust. They don't know why it was set up. Frankly, it didn't seem to be making their lives that much better. And at that stage, I was also working with families around the world. And I found this universal element of a heck of a lot of professionals doing a lot of work for a bunch of people who weren't necessarily being helped.

Patricia Angus

What I found was there was a need for a way to understand the framework. It's one thing to get a 20-page single-spaced document that if I had to drink two glasses of Espresso just to get through it, wouldn't a beneficiary who hadn't suffered through three years of law school need five glasses of Espresso? So I decided to put it into what I call human language, not lawyer language. And my hope was that it would help people who are smart, who have their acts together, but they just were not steeped in the language, the framework, the concepts, and that they can understand how to make the most of their trust. And so that's been my goal, and I hope it helps at least one person. I have to say one of my editors said it had already helped her, so I figured it helped the one person I was hoping for, but that was the goal.

Kirby Rosplock

Well, I'll put my endorsement in. It's helped me tremendously. And I think what I love about the books that you've been writing is just how accessible. They don't dumb things down. They just make things readable, understandable. And you actually talk about a lot of the practical issues that beneficiaries face. And there's so many misunderstandings when it comes to beneficiaries. And that's the other thing I think your book does really well. Maybe you can talk more about what I mean by that.

Patricia Angus

You know what's so misunderstood? And here in the US, especially, we love talking about trust fund babies. All of the private wealth management firms, all of the advisors out there are saying, We want to avoid trust fund babies. They think that the problem is in the beneficiary. But honestly, I think being a beneficiary of a trust is extremely hard. This has an emotional undercurrent unlike almost anything else. It's even more complicated than being a child who has to understand how to grow up and differentiate yourself from your parent, because this could not last until you're 18 and then emancipated, it could last your entire life, and it could last a couple of lifetimes beyond you. So the number one thing that's misunderstood, it's really hard. And the other thing that's misunderstood is that those people who people like to look down on and say they're trust fund babies, it's not just their behavior, it's the way that they are treated by the world around them that makes such a difference. I was on a call once with a bunch of lawyers, and they literally called the beneficiaries of the trust that they had spent so many hours creating, being like little beaks coming to a nest.

Patricia Angus

And it was so condescending and so patronizing to grown adults who were legitimately saying, what are my rights? What are my responsibilities? How do I actually live with this trust in my life? So I think that two things misunderstood. One, it's hard. Number two, it's not just the beneficiary's behavior that is at stake. Because number three, what's gone on in the world now that we have so many trusts that are not just in the US, but in other countries as well, is that often they are reduced down to being like an account. It's like an investment account or like a product. Oh, I have a trust. Do you have a trust? It's like, okay, I have a car. Do you have a car? It's more than that. It's a relationship. It's not even a legal contract for any lawyers on the call. This is not as simple as offer, acceptance, and consideration. That's all you need for a contract. When you have a trust, your You're taking legal ownership and you're separating it from beneficial ownership. So I can become responsible towards you. If I became your trustee, say somebody decides they want to create a trust for your benefit.

Patricia Angus

I'm legally responsible. I have to have to have a title over it. I have to administer it. I have to invest it. And then I have to do everything for your benefit. And maybe I get some fees, but other than that, it's not for me. That's really hard for a trustee to understand. It's even harder for a beneficiary. So, Kirby, you're used to owning your own car, your own house, your bicycle, your iPad, whatever it is. You don't own a trust in the same way, and yet you're a beneficiary of it, and you have rights against the trustee to have it enforced. It's fascinating. I love it. I think it's really cool.

Kirby Rosplock

It is fascinating. I'm so glad you explained that complicated relationship, because I do think when you read about it, sometimes it's really hard to grasp that beneficiaries aren't the legal owner, and most people think, well, I have a trust, and therefore I have those assets. Actually, you don't, right? I mean, you may become a trustee at some point, or maybe you are a trustee. There are those kinds of trusts. But I mean, there are so many complicated relationships. And I mean, that's what I also love about your primer, is that it helps to tease out what you need to do to unpack and understand your trust. Are there any examples or stories that come to mind that you want to share from your book or just from your experience experiences?

Patricia Angus

Yeah. And I'm always reluctant to give examples in detail because I hold my client's confidence really close, even though I'm no longer practicing the law, thank God, I still believe in confidentiality at that level. But I can think of some examples that all fall together under a theme that are reflected by some beneficiaries who showed up in my office maybe 10 years ago. And they said, Our parent died. The lawyers have thrown all these trusts at us. We don't understand what they say. We have graduate degrees from really good schools. We're not dumb. What the heck is going on? Because we don't feel in control. They were in mourning over the loss of their parent to begin with. And on top of it, they had this other layer of trying to understand the legal aspects of it. So they went to their lawyer, and the lawyer threw the trust agreement at them and gave them lots of legal language. That didn't help them. They went to their accountant, and the accountant said, okay, here are all these statements. And they literally had statements that high. They had 25 trusts, I think, between the several family members.

Patricia Angus

That didn't help them that much. And then the investment professionals said, okay, here are your investment statements. Let's show you what's in the trust. That didn't help them. What we did was we tried to figure out together what language would work for them, what imagery would work for them, and what way of processing information would help them really feel that the trust was theirs, that they could integrate it, and they could act on whatever they needed to do. In the end, we came up with a visual. It had no numbers. It had no words, and they understood their trusts. And thanks to the visual, they said, oh, my gosh, that one is supposed to be supporting us, and it doesn't have anything fruitful in that image. Where's the income? And so they didn't even have to numbers on a page to realize that it was being invested improperly for the purpose of that trust. So in that case, really working together and using the beneficiary's own way of processing information, we came up with a way for them to act on it and to get to know their trustee better. I think the other thing that I've worked on quite a bit is the relationship between the trustee and the beneficiary.

Patricia Angus

I can think of the first time I had a client sign a trust agreement and had their trustee in the room the exact same day, had a conversation with the trustee and the beneficiary and said, this is my plan. This was my intention. That's very different from going back 25, 30 years ago when I started out, where the settler or grantor or person who had funded the trust, whatever terminology you wanted to use, was long since gone. And so the poor beneficiary didn't know what the plans were, didn't know what was going on. So that's some of the things that we've done. We've explored what was your relationship with the settler. It's really difficult for some people. Not every family member is nice. Not every family member made money in a legit way. Not every family member that's your grandmother, uncle, aunt, was somebody you heard great things about. Helping people process that relationship versus the trust for their benefit, is a lot of what I spend some time on.

Kirby Rosplock

Yeah, that's fantastic, and that's so helpful. I think it really humanizes the whole trust experience and gives great perspective that's insightful to both the beneficiary and hopefully all the fiduciaries or parties to the trust. So I am so happy that we could have you here today, Patricia, to share more about the beneficiary primer. It's an excellent resource. I encourage anyone listening to today's Tamarind Learning podcast to check it out. And again, I hope we can talk more about your great works and the important work that beneficiaries and trustees need all around the globe. So, Kirby Rosplock, your host of the Tamarind Learning Podcast thanking Patricia Angus for being here today.

Patricia Angus

Thank you for having me here.