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Financial Skills Trust: An Insight into Future Planning

Posted by Scott Lynett, Esq. | Sep 15, 2023 | 0 Comments

There's an old saying that “Wealth doesn't build character, work builds character.” Many of my clients are conflicted about leaving wealth to their children. They want to make their children's lives better but don't want inherited wealth to rob the children of motivation or deprive them of the happiness that can only come from achievement.

That's where a Financial Skills Trust comes in.


The world of financial planning and wealth management has evolved significantly, creating innovative tools and strategies to preserve and grow wealth. One such tool that has caught my attention is the Financial Skills Trust. But what is it, and how can it help you plan for the future? Let's delve into its intricacies.

What is a Financial Skills Trust?

A Financial Skills Trust (FST) is a legal arrangement where an individual's assets are managed and protected by a trustee. Unlike a traditional trust, an FST focuses on more than just asset management; it also aims to provide the beneficiaries with financial education and the skills needed to manage the trust responsibly and use the trust assets to enhance their lives.

The Parties Involved

  1. Trustmaker: The individual who creates the trust, transferring assets into it.
  2. Trustee: The individual or institution responsible for managing the assets and executing the trust's terms.
  3. Beneficiary: The person(s) who benefit from the trust, receiving assets and financial education.

Why is a Financial Skills Trust Important?

  1. Educating Beneficiaries

An FST emphasizes teaching financial skills to beneficiaries, such as budgeting, investing, taxation, and overall financial management. By doing so, it helps beneficiaries become financially literate and responsible, a quality often overlooked in traditional trust planning.

  1. Asset Protection

Like other trusts, an FST protects assets from creditors and legal disputes. It offers a layer of privacy, and the trustee ensures that the assets are handled as per the trustmaker's instructions.

  1. Tailored Financial Guidance

The trustee can provide personalized financial training to beneficiaries, considering their unique needs, interests, and abilities. This ensures that they not only inherit assets but also the skills required to manage them efficiently. As noted, an FST is designed to help a beneficiary learn critical personal financial skills like budgeting, the proper use of debt, saving for retirement, investing, and more, skills that are not taught in most school curriculums. Of course, your FST would be custom-designed to meet your family's needs.

Setting Up a Financial Skills Trust

Setting up an FST involves various steps and considerations:

  1. Identify the Assets: Determine what assets will be placed in the trust, like real estate, stocks, bonds, or business interests.
  2. Choose the Trustee: Select a knowledgeable trustee who can effectively manage assets and provide financial education. Most importantly, your trustee should understand your values and your goals for your children.
  3. Draft the Trust Agreement: Work with a legal professional to draft an agreement detailing the terms of the trust, including specific financial education requirements.
  4. Fund the Trust: Transfer the chosen assets into the trust.
  5. Ongoing Management: Regular monitoring and assessment to ensure the trust's objectives are met.

Potential Drawbacks

While beneficial, an FST may not be suitable for everyone. It requires careful planning, and the selection of a competent trustee is crucial. Furthermore, the cost of setting up and maintaining an FST can be relatively high, depending on its complexity. That additional cost can be viewed as an investment in your beneficiary's financial education.


A Financial Skills Trust represents a holistic approach to financial planning. It not only safeguards assets but also empowers beneficiaries with financial knowledge and skills, enabling them to manage their inheritance responsibly.

With the right planning and guidance, an FST can be a powerful tool for individuals looking to leave more than just material wealth to their heirs. It embodies a commitment to fostering financial wisdom, laying the groundwork for a secure and prosperous future.

I hope this information has helped you understand the basic idea of a Financial Skills Trust. Please consult The Law Office of Scott Lynett, Esq. or a financial professional if you are considering establishing such a trust, as they can provide personalized advice based on your unique situation.

Feel free to use the link below to contact my office for a free consultation on how a Financial Skills Trust could best serve you and your family.

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