The following is an article from the November 2019 issue of "Get Your Ducks in a Row" Carolina Family Estate Planning's free newsletter. You can read the rest of the issue, as well as back issues of our newsletter online at www.carolinafep.com/library/newsletters/ or subscribe for free at www.carolinafep.com/newsletter.cfm
This article is part 2 of a series of 2 articles. The first article of the series is posted here.
“Wish not so much to live long as to live well,” Ben Franklin reminded his readers in the 1738 edition of Poor Richard’s Almanac. As I noted in last month’s article on Franklin’s legacy, if old Ben was indifferent to long life, he was certainly concerned with a lingering legacy. It seems that for Franklin, to live well was to ensure his legacy would remain in a form that cohered with his most deeply held values: service to the young nation, entrepreneurship, hard work, and thrift.
You may remember how in Ben Franklin’s will he painstakingly laid out the creation, maintenance and distribution of philanthropic trusts designed to last exactly 200 years. He made two separate trusts-one to the city of Boston and one to his hometown of Philadelphia. Each trust initially contained £1,000. The trusts were designed to be doled out in small loans at 5% per year to married men under 25 who had completed apprenticeships and wanted to start a business.
Sound good? Here’s the problem: Ben Franklin’s careful calculations were, despite his best intentions, wrong.
According to researcher Christopher Carosa, the original bequest of £1,000 in 1790 was worth between $146,000 and $197,000 in today’s dollars. If distributed and invested according to his instructions, Franklin predicted the trusts would be worth $637,000 apiece in 1890. Of this, $486,000 would be distributed and the remaining $151,000 would continue to be invested as originally intended. Finally, the remaining $151,000 in 1890 was expected to grow to $7,390,000 by 1990.
In reality, by 1890, the Philadelphia Trust contained $72,819. The Boston fund faired slightly better and was, by 1890, valued at $368,741.19. Both fell short of Ben’s predictions.
What happened? A number of factors seem to have contributed. Franklin’s predictions about inflation, considering his calculations, were, as it turns out, incorrect.
Furthermore, Franklin’s highly specific qualifications for the micro-loans caused the committee administering his estate to scratch their heads. They desired to fulfill Franklin’s wishes, but, relatively quickly after his death, they were at a loss to make the loan offer worthwhile for Franklin’s hoped- for beneficiaries: young entrepreneurs. You see, as the economy developed, would-be borrowers were able to find better sources for loans.
Another major issue was Franklin’s litigious descendants. In 1890, they sought to prove that the trust never should have been established in the first place. At the end of the day, however, the heirs lost the legal battle and Franklin’s design limped on.
More drama swirled regarding authority over the Boston fund. Franklin’s will designate the town Selectmen as the trustees of the fund. In the century following his death, the city governmental system had been reorganized, leading to confusion and power grabs. In 1930, a Massachusetts Supreme Court decision was necessary to discourage yet another power grab for Boston’s Benjamin Franklin Trust, by then valued at nearly half a million dollars.
Ultimately, Franklin’s legacy made it the 200 year mark before it was dissolved according to his instructions.
So what’s the lesson in all of this? Estate planning has evolved dramatically in the centuries that have passed since Franklin’s death. Modern estate planning has learned much from past cases such as Franklin’s and modern estate planning documents are now usually constructed with numerous levels of flexibility to accommodate changing and unforeseen circumstances.
Here at Carolina Family Estate Planning, our team regularly helps clients build plans that protect their loved ones against future catastrophic events such as lawsuits, medical debt, bankruptcy, death, and divorce, while also including flexibility to adjust to changing or unforeseen circumstances. Why? Because unforeseen circumstances almost always arise in estate planning.
We would love to help you anticipate future bumps and ensure your values get translated into your estate plan. Give us a call at 919-443-3035.