Do you want to use your estate plan to motivate your loved ones to do something great? If so, then an incentive trust might be a viable option for you. Here, you identify a beneficiary to the trust, but that beneficiary will only receive the trust’s assets once they comply with a condition that you’ve implemented.
You can be creative with the conditions you place on an incentive trust, too. Any of the following could be used to drive your loved ones to achieve goals that you identify for them:
- Getting married
- Having a child
- Graduating college
- Holding a full-time job
- Completing substance abuse treatment
Advantages of an incentive trust
In addition to motivating your loved ones to act in a favorable fashion, you can use an incentive trust to push them to avoid less desirable behavior. For example, the incentive trust can block a named beneficiary from receiving support if they abuse drugs or alcohol. Since you know your loved ones best, this trust type allows you a great amount of control to impact their lives for the better.
Disadvantages of incentive trusts
There are some disadvantages that you should keep in mind. For example, enforcing the terms of an incentive trust can be difficult. Using the example mentioned above, how would a trustee know if a beneficiary is abusing drugs or alcohol? Also, given the concreteness of these terms, trustees are sometimes left without the flexibility needed to support the beneficiary under unusual circumstances, such as when the beneficiary becomes disabled. Fortunately, with a bit of thoroughness, you should be able to address these issues.
Use the estate planning tools that are right for you
An incentive trust can be a great vehicle to use in your estate plan. But it’s not the only tool you can use to create the holistic and effective estate plan that you want. If you want to learn more about how to make your estate plan strong, then please consider researching the matter and reading through our website.
