The following is my answer to a Quora question: “Does
the use of trusts, to protect assets, lead to concentrating wealth, in the
hands of the few, over time?”
No, since that would be the opposite
of how trusts work. A trust, unlike a
will, does not allow the heir, or heirs, to have all that wealth at once. The assets of a trust are drawn down over a
period of time, which dilutes the impact of the wealth, and precludes
leveraging it to the degree one would be able to with the entire estate.
Another point of consideration is
that a trust often serves multiple heirs, and has inherent costs, such as the
trustee fees. Over time, this causes a
process we call a regression of the mean, which is when the impact of wealth is
diminished by being spread out over multiple heirs.
What causes the concentration of
wealth is the acquisition of assets. An
example would be property, or creating a monopoly over time. This is where acts of legislation such as
anti-trust laws, and land acquisition laws come into place. If wealth is slowly being concentrated at one
point, it means that the economic and political system has severe problems that
have to be addressed before the state fails.
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