A dynasty trust enables a degree of personal autonomy that is otherwise hard to achieve in a global economy characterized by punitive tax rates, job concentration in hierarchic corporations and public-sector agencies, and increasingly precarious property and privacy rights. A well-designed dynasty trust provides to generations of beneficiaries at least the minimum material support necessary for physical survival. A dynasty trust can also be a perpetual source of funds for new business investments and philanthropic projects.
The term personal autonomy generally means the capacity to select choices and make decisions based on one’s own values and preferences. Personal autonomy implies the ability to internalize values and beliefs, observe and analyze situations, discern one’s desires and preferences, set goals, and identify a corresponding course of action. Personal autonomy is strongly correlated with human dignity and self-respect.
Very few members of our society actually control the means of their physical livelihood. Most of us work for wages or salaries as employees in private enterprises or government agencies. As a result, our jobs are subject to the decisions of managers over whom we have no substantive control. Some people are business owners and have no formal boss, but are nevertheless subject to directions from clients, customers, government regulators, tax collectors, campaign contributors or prevailing public opinion.
In any case, we all pay various combinations of rent, mortgage, medical and dental bills, auto payments, sales tax, business tax, income tax and real estate tax, which are always increasing and which are mercilessly collected. With few exceptions, people are locked into an economic system that affords little flexibility in a relentless struggle to pay their monthly bills. Economic efficiency demands routine compliance with workplace procedures and acquiescence to management decisions. While such conformity makes economic sense, it is somewhat inconsistent with notions of personal autonomy. Thus, despite living in a society that formally affords liberal political and personal freedoms, as a practical matter, most of us have little opportunity to experience personal autonomy in the workplace. Legally we have the right to protest or quit a job when we disagree. Practically, we have to think about serious existential consequences of disagreeing. Consciously or unconsciously, every person who must earn a living knows that conformity puts food on the table, and that nonconformity gets him fired.
This is not to say that personal autonomy cannot exist in our economy. But even under the best circumstances, conflicts typically arise between an individual’s values and the goals of his boss. If and when the individual surrenders to the organization, which he is likely to do if his physical livelihood depends on it, personal autonomy loses.
The loss of personal autonomy in today’s society is a loss of personal dignity for an individual. Just as important for society as a whole, however, is the resulting moral vacuum in the workplace. An individual accustomed only to performing an economic function in a hierarchy, focused on satisfying a supervisor and achieving profit-oriented goals, is not psychologically capable of making moral decisions or resisting immoral ones. This phenomenon might help to explain the lack of moral fortitude among politicians, government regulators, journalists, bankers and deep-water oil producers.
A dynasty trust provides at least a degree of financial independence that insulates a beneficiary from the economic pressures described above. It enables the kind of personal autonomy necessary for an individual’s self-respect and for honest, moral decision-making.
Critics suggest that dynasty trusts encourage irresponsible and nonproductive behavior in beneficiaries because their economic survival is somewhat guaranteed no matter what they do. Reality does not conclusively support that view. The history of the United States contains innumerable examples of inheritors of family wealth who made significant contributions to society, even though they could easily have survived their whole lives doing nothing. Further, there is historical support for the idea that inherited wealth enabled good work by individuals that they would otherwise not have done. Also, arguably irresponsible conduct of individuals is already protected now by the limited liability of corporations, LLCs and worker compensation laws, and asset protection by a dynasty trust does not really alter the legal landscape there.
A dynasty trust does not guarantee personal happiness or moral conduct in society. A dynasty trust, however, might provide the financial independence and security that enable the development and exercise of personal autonomy, which is a necessary component of human dignity and moral decision-making.
Copyright 2010 – Thomas Swenson