TheNew York Times has reported that many wealthy Americans seem reluctant to take advantage of the new tax breaks which Congress recently afforded them should they elect to set up trusts which will provide them with substantial breaks on estate taxes. These new tax breaks will expire in just two years so it is a "use it or lose it" proposition promising substantial savings for those super-advantaged folks in a position to benefit from the new law. Since the trusts take up to a year to implement, the window of opportunity is only open for a very short period.

What makes this rather interesting is that it seems that there are two reasons to explain this unexpected reluctance. The first is the fear that the funds used to establish the trust would be unavailable to the creator should he or she ever need the cash. The other reason is the fear that setting up the trust will give such assurance of financial security to the creator’s children that they will not have incentives to work and succeed in life .

The interesting aspect of this is that Americans who have worked hard to succeed and create wealth often realize the dangers implicit in giving too much to children and grandchildren. It has been said that we often go "from shirtsleeves to shirtsleeves in three generations". After striving to succeed, the last thing these folks want to happen is to have their children so unmotivated to lead a life of accomplishment that their fortunes are dissipated and their grandchildren find themselves at the bottom of the same ladder where grandpa and grandma once started.

Meanwhile, keep in mind that we are not dealing with money here. We are dealing with MONEY! The people who can best utilize this new law are often dealing with tens of millions of dollars. For better or worse, the new estate tax and gift tax provisions enable wealthy Americans to shelter millions of dollars which would earlier have been taxed at their deaths. In this age of supersized budget deficits where our government is scrounging every last dollar and looking to save at the expense of seniors and the poor, the plight of those who cannot figure out just what they should do with a few million dollars (under the old estate tax laws, many of them might have been inspired to donate some of that money to charitable causes and establish foundations for the public benefit) somehow fails to move me to tears.