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Let's imagine the following: Mr. Leopold is an investor. He managed to save fifty million rubles by investing by now. He has children, but he is afraid that they will waste all his fortune after he dies. He wants to let his children receive a certain amount of money from his investments every month, but he does not want to allow them to ever be able to receive all the money. He wants them to be forbidden to dispose of all his property, but he also wants them to receive money every month, that is, passive income.

My question is the following: How can he do this? With the help of the bank? Is it even possible?

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    You mention Rubles; does that mean the country is Russia? The answer could be country specific. Mar 19 at 9:59
  • Note many jurisdictions have some en.wikipedia.org/wiki/Rule_against_perpetuities ; it's generally considered bad to let dead hands run the economy forever.
    – pjc50
    Mar 20 at 11:05
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    Mr Leopold has control issues.
    – chepner
    Mar 21 at 11:44

2 Answers 2

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This is done with a legal entity called a trust.

A trust is where a person (trustor) arranges to give assets to another person (trustee) for them to hold and manage for the benefit of a third person (beneficiary). There are lots of different use cases for this type of arrangement, but a common use is the one you describe; it allows a person to set up an account with a financial institution where the assets are managed, and the profits can be given to a beneficiary, but the beneficiary does not have any control of the assets. The person setting up and funding the trust decides ahead of time how and when those profits are given to the beneficiaries, and what ultimately happens to the assets (and when).

To set up a trust, in most cases you need to consult a lawyer. Depending on your country and what you want to do with the trust, there are some types of trusts that can be set up directly with a financial institution without involving a lawyer.

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    Is the trustee a person or an organization? Mar 19 at 13:48
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    @Жёлудь-мистэ́р Many kinds of rules can be placed on the trustee, but an important caveat is that only living people will raise lawsuits.. so if all of the beneficiaries and the trustee agree to distribute the property, there is no-one to sue them for not following the rules set by the deceased.
    – jpa
    Mar 19 at 16:59
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    @Жёлудь-мистэ́р A trustee is usually an investment company or wealth management division of a big bank. Key words: trust services. In times past (1950's), it could be a trust department of a local bank.
    – user71659
    Mar 19 at 18:07
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    @jpa Indeed. It is worth noting that this would not necessarily be maladministration of the trust: trust law often recognises that circumstances may change such that the original conditions no longer make sense. For example: I might leave money in a trust to pay for books for a specific school. What happens if that school closes? Typically, it would be legally-acceptable for the trustees to reinterpret my wishes and use the money to buy books for other nearby schools, or for children living in the local area, or...
    – avid
    Mar 19 at 18:08
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    @Жёлудь-мистэ́р in Australia it is more common for a trustee to be a private company or an individual person than to use a big bank or other firm. I imagine that is the case in other jurisdictions as well
    – coagmano
    Mar 20 at 0:43
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In Russia, Mr. Leopold would draft a will and specify that he wants to leave some or all of his assets to an inheritance fund (наследственный фонд):

ГК РФ Статья 123.20-8. Создание наследственного фонда и управление им

После смерти гражданина, который предусмотрел в своем завещании создание наследственного фонда, такой наследственный фонд подлежит созданию по заявлению, направляемому в уполномоченный государственный орган нотариусом, ведущим наследственное дело, с приложением к заявлению составленного при жизни указанного гражданина его решения об учреждении наследственного фонда и утвержденного этим гражданином устава фонда и после его создания призывается к наследованию по завещанию в порядке, предусмотренном разделом V настоящего Кодекса.

The inheritance fund is a non-commercial organization (НКО) that would be incorporated by the notary handling Mr. Leopold's probate case (наследственное дело) upon his death, according to the instructions he would give to the notary certifying the will.

Upon incorporation, the fund would accept the inheritance and (hopefully) manage it according to the instructions given by Mr. Leopold.

The fund is a heir at will (наследник по завещанию), so if Mr. Leopold is survived by heirs at law (наследники по закону) eligible for a mandatory share of the estate (обязательная доля в наследстве) — that is senior, disabled or underage spouse, parents, children, or dependents — the fund will only receive what's left after carving out their legally mandated shares in the estate.

This is a relatively new (to Russia) instrument, so I'm not sure how well it works in practice, although I know someone who told me they've set it up.

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