01 February, 2020

Quora Answer: Do Trusts Lead to Wealth Concentrating 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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