Wills, Trusts & Estates
Law Office of Steven M Berger, LLC


News & Updates

Financial Literacy compared to Trust Literacy

Comptroller Peter Franchot invited the Financial Planning Association of Maryland to Annapolis for a symposium on House Bill 191.  House Bill 191 and Senate Bill 307 will require the Maryland High Schools to include a required course on Financial Literacy as a graduation requirement.  The bill is patterned after a similar law already in effect in Virginia.  I listened to many of the speakers recite real issues of young people in their 20s with the stigma of bankruptcy preventing them from buying a home or a low credit score denying them a security clearance necessary for government employment.  I compare these young people to my successful clients who understand the time value of money, limiting credit card debt, and saving for emergencies.  Many of my clients are the "Mass Affluent" because they put Financial Literacy into action in their lives. Nevertheless, many of the "Mass Affluent" are not trust literate.  They are not comfortable with putting their money into a trust and setting parameters for how their wealth will be used for the following generations.  In contrast, another group of clients who are been a beneficiaries of a trust assume that their wealth will be passed on in trust for their children.  "Old Money" is educated on the value of having a reserve fund that can be used to leverage opportunities or provide for education of their children.

My challenge with the "Mass Affluent" my task is to educate them on the value of what they have accumulated and how trusts can help their beneficiaries to be good stewards of what is given to them.  Even a relatively small amount of money set aside for a young person can make a huge difference as it grows over the years. Often the concern of the older generation is their perception that the younger generation lack financial literacy to utilize the resources left to them.  I concur that financial literacy is a must.  The graduation requirement is a good start.  Trust literacy is a follow on and can be used to reward and develop financial responsibility by a properly drafted trust drafted on those principles.

TrustsSteven Berger