🛠️“Trust Fund Baby” Is Outdated, Here’s What The 1% Actually Builds

☕ Good morning SenseMakers!

Let’s talk planning for a child’s financial future and inheritance, but without the velvet rope.

You’ve worked hard, built real income, and maybe even stacked a few commas. Maybe you hit your “I can retire indefinitely” amount, and then a kid popped into the equation. Or two. Or even more. 

Then, the narrative shifts: How do you build real freedom without raising a financially feral twitch streamer, or creating a legacy laced with entitlement?

Importantly, how do you make sure your wealth doesn’t just sit, it scales? For a lot of families, the answer isn’t some last-minute estate scramble. It’s early, deliberate structuring.

📈Family Business: Hiring Your Kids the Smart Way

Kids these days are dangerously good at TikTok, YouTube, content editing, and hunting down the latest trends. 

Not to mention that there are tutorials for everything. They can learn basic thumbnail design, basic video editing, product testing, and social media strategy in a weekend. 

That’s not just screen time, it’s billable time.

If you run an LLC, you can hire them to help with growth-friendly tasks, like editing short-form content, finding trending sounds or video hooks, testing user experience, writing captions, or helping with audience engagement.

What sounds like work to you might just be fun for them. 

Pay them what you’d pay on the open market. File W-2s, keep time logs, and save receipts. As long as it’s real work, it’s real compensation… and here’s where it gets fun.

That income can go into a custodial Roth IRA. The 2025 limit is $7,000. Just a $6,000 contribution at age 15 can grow to $100K+ by retirement. Tax-free.

Bonus: Those wages are a deductible business expense for your LLC.

And because their total income is likely under the $15,000 standard deduction, they’ll owe zero federal tax. You’re creating a permanent tax shelter in a 0% bracket.

Even better? Roth contributions can be withdrawn tax-free at any time (not the growth, just the contributions), and qualified withdrawals, such as those for education or buying a first home, are penalty-free.

This is more than a write-off. It’s the beginning of their financial foundation. You teach them how to earn, how to invest, and how to use the tax code in their favor, while lowering your own business tax bill in the process.

🔧 Trusts That Work While You’re Alive

High-earning families aren’t waiting to die before transferring value. 

They’re moving assets strategically now, when valuations are favorable, and tax rules are wide open.

Take a GRAT (Grantor Retained Annuity Trust). It’s a tool that lets you shift future growth out of your estate while keeping today’s value within reach. For example, transferring early-stage startup shares into a GRAT when the valuation is still peanut butter and jelly. 

Over time, as the company scaled, all that upside grew outside their estate: no estate tax hit, no drama.

There’s also the SLAT (Spousal Lifetime Access Trust). This strategy lets you gift assets out of your estate now, but still access them through your spouse. Think of it as offloading wealth for tax reasons, without kissing it goodbye. Especially helpful if estate tax exemptions get slashed in 2026.

And here’s the cherry on the cake, you can stack these trusts inside tax-optimized states like South Dakota or Nevada to get better creditor protection and zero state-level estate tax exposure.

You don’t need a $50M net worth to play this game, but generally once you have $2M+ in appreciating assets (equity comp, RSUs, real estate, a business, etc) these strategies start making a serious impact.

I’ve seen families transition from passive inheritances to proactive infrastructure, using the same playbook, scaled to fit their needs.

🎥 How the Wealthy Set Up Their Kids for a Lifetime of Tax-Free Growth

In this video, I’m breaking down how high-earning families structure wealth transfers without handing their kids a free pass to mediocrity. 

We’ll walk through how to pay your children through your business, how a custodial Roth IRA can quietly turn summer jobs into six-figure portfolios, and how the right trusts let you move assets now without locking them away forever.

Done right, it’s the kind of playbook that turns inheritance into infrastructure and taxes into opportunity.

🎓 Education Planning Beyond the 529

“Max the 529” is fine advice, but high earners have better tools.

One family started with a 529 but didn’t stop there. They opened a custodial Roth IRA for their teen using legitimate earned income (yep, her paid coding internship through their LLC counted). 

Then, they added a minor-held brokerage account to capture long-term capital gains, which are taxed at the child’s lower tax bracket. This combo lets them grow funds for college and teach investing, while strategically minimizing the tax bite.

When minors earn legitimate income, they can contribute to a Roth IRA, up to $7,000 in 2025.

The growth inside that Roth is tax-free. Meanwhile, gains in the brokerage account are taxed at the kid’s much lower rate, often 0% to 10%, versus the parents’ 24% to 37%.

You don’t need to do it all, but understanding your options turns education funding from a bill into a tax-advantaged growth plan.

💼 Making Sense of Planning for a Kid’s Future

Here’s what it all adds up to: The best inheritance isn’t a windfall, it’s a framework. 

It’s not a lump sum gift waiting for the IRS to take a hearty bite of, but rather a living system that keeps working behind the scenes.

Set that up, and your kids don’t just get money, they get better credit, easier access to business and mortgage loans, and the kind of compound growth that opens real doors. 

Done correctly, they also get the wiggle room to make mistakes like every young adult does without burning the barn down. 

It starts with smart timing. Establish trusts when asset values are low. Fund education with tax awareness, not just brute savings. 

And treat your kids like future builders, not passive recipients. That means financial literacy at 14, not 34.

As always, I hope this helps you to Prioritize Your Version of a Rich Life.

Until next week!

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

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