Wealthy families know it can be hard to motivate their children to be productive members of society when trust funds are available to support those children. I hear Warren Buffett quoted often in my estate planning practice: The perfect amount to leave to kids, he says, is “enough money so that they would feel they could do anything, but not so much that they could do nothing.”

Worried that access to unlimited funds is bad for their children’s independence, wealthy parents often turn to “incentive trusts” to hold their kids’ inheritances. These vehicles instruct a trustee not to give money to an adult beneficiary who is not engaging in a productive lifestyle such as working or caring for family members.

As a tool for influencing behavior, they are imperfect, however. It is unlikely that a trust fund by itself is going to make a child work. Research, in fact, tells us the opposite can be true. Behavioral economist Dan Ariely has found that people who expect a big reward for success at a cognitive task will do less well than those who receive a small reward. The pressure of the big payoff overwhelms the money motivation.

That pressure is often amplified if the child has financially successful parents. According to psychology professor Suniya Luthar, kids from wealthy families are more likely than those from the middle class to struggle with substance abuse, depression and anxiety. There are many reasons for these psychological difficulties, but Luthar suggests that excessive pressures to achieve may be one component. Many of the children who grow up with wealth go on to successful careers, excelling under the pressure. Many as well will believe that their value is tied too closely to societal markers of success, or that it is never possible to achieve the level of success of their parents. This fear of failure and self-doubt can make it more difficult for a beneficiary to become independent.

So money does not necessarily buy a child’s productivity. But all is not lost. According to Chloe Carmichael, a clinical psychologist who often sees successful and wealthy clients at her Park Avenue address, the healthier dynamic is for nobody to take responsibility for the beneficiary’s independence except the beneficiary. Carmichael has watched beneficiaries adjust and make a choice to be self-supporting when it is best for the beneficiary. Her message is that a trustee needs flexibility to craft and communicate limits tailored to each beneficiary’s individual personality and situation. With the right kind of support, a beneficiary may find internal motivation to choose to be independent.

Trustees can’t give a child internal motivation. But I believe there are things they can do to support a child’s independence: They can help a child build decision-making capacity and resilience, with appropriate and transparent limits.

The ‘Resilience’ Trust
When we look at all the weaknesses of incentive trusts, we can move beyond them and consider a modified structure that encourages a beneficiary to take responsibility for her own decisions and handle setbacks on her own. I call this a “resilience trust.”

Its first feature is that it doesn’t keep secrets from adult beneficiaries. Clients usually want to conceal from their children the amount of money in trust for them—or even hide the trust’s existence.

The resilience trust, however, values sharing information over secrecy. It assumes that the beneficiary already has a general idea about the family’s wealth and will understand that secrecy is a vote of no confidence.

The second feature of the resilience trust is the way it approaches the idea of acceptable behavior in the beneficiary. If a standard incentive trust offers a black and white expression of approval or disapproval, the resilience trust offers grey areas for both the beneficiary’s behaviors—and the trustee’s reactions. The trustee is encouraged to share the goals of the settlor with the beneficiary and seek to understand the individual’s reaction to goal-based limits. Testing limits may be an indication of the beneficiary’s journey toward independence and so should be an expected part of trust administration. The flow of funds in a resilience trust can be adjusted and does not have to be turned off.

Another key feature of this trust is that it should accommodate failure. The beneficiary should be encouraged to make decisions and feel the impact of those decisions. Consider a climber in a harness: If there is enough slack in the rope attached to it, when the climber falls, she can feel it and process what went wrong without getting seriously injured. If the rope has too much tension, however, the climber doesn’t even realize how much she’s being pulled up or supported by somebody else. A trustee should make sure there is the right amount of slack so the climber gets a true feeling about her own efforts.

The trustee of one of these vehicles should also support resilience-building activities. Studies show that wellness is a key factor in building resilience, so expenses for things like therapy, a nutritionist or yoga classes could all be considered within reason. The trust should also allow for the beneficiary’s intimate involvement in the community and her mastery of skills that help her build internal fortitude. The trustee, for instance, could support lessons outside of the standard educational curriculum, even for beneficiaries who would not meet the qualifications of a typical incentive trust.

A resilience trust, in practice, would look much like a discretionary trust: The trustee would use his or her own discretion about what is best for the beneficiary given the settlor’s specified goals. It would require flexibility, not mandatory maintenance, support, health or education. When it comes to the beneficiary’s behavior, the trust would consider her internal, rather than external, motivation. The trust instrument would contain a clear description of the settlor’s goals and priorities in line with encouraging a beneficiary’s resilience and independent decision-making. The drafting attorney would carefully review provisions about the right of the beneficiary to information. Finally, while the beneficiary’s parents are alive, they would prepare her for the inheritance with continuing conversations, much as Warren Buffett has done with his children, so that the limits discussed with the trustee do not come as a surprise.

We dub this a “resilience trust” because it supports resilience-building efforts rather than mandating a particular lifestyle choice.

It is the hope, although not necessarily the outcome, that resilient trust beneficiaries will avoid many of the perils that lead to a lack of productivity: the fear of failure and self-doubt that often plague children of wealth.

Attorney Sarah H. B. Kahl is a partner in Venable LLP’s Tax and Wealth Planning Practice.