You have the power to plan your estate in a customized manner. Estate planning is not necessarily an exercise in slicing up a pie into different size pieces as you facilitate lump sum asset distributions after your passing.
In many cases, a windfall of money can do more harm than good on some levels. There are probably some people on your inheritance list who are quite well-established in their own right, but there could also be younger family members who have not reached their full potential as human beings.
Under these circumstances, you could create an incentive trust. As the name would indicate, with this type of trust you include incentives that must be met. Distributions would only be forthcoming if the conditions were satisfied.
For example, let’s say that you have a grandson that came along late in your son’s life. You recognize the fact that you will probably pass away before your grandson completes his college education.
In a case like this, you could create and fund an incentive trust. In the trust declaration, you could empower the trustee to pay for college expenses, and you could provide relatively modest monthly cash distributions as long as your grandson is a student in good standing.
Perhaps you could allow for larger, lump sum “reward” distributions after your grandson’s graduation from each level of higher education.
To foster a work ethic, you could arrange for the trust to match your grandson’s on-the-job earnings dollar for dollar until he reaches a certain age threshold. Ultimately, you could allow for larger distributions when your grandson is clearly on firm footing as a mature, self-supporting adult.
It is also possible to use an incentive trust to guide a loved one away from self-destructive behavior. You may include any stipulations that you want to, as long as there are no illegalities involved.
Explore Your Options
An incentive trust can be the ideal estate planning tool in some instances, but there are many different tools in the estate planning toolkit. You should explore your option so that you can be certain that you are providing for each of your loved ones in the ideal manner.
If you would like to obtain detailed information about the various different estate planning strategies that exist, we invite you to peruse our electronic library of special reports. We have prepared numerous different estate planning reports that can provide you with a great deal of very useful information.
These comprehensive special reports are being offered on a complimentary basis, so you can build on your knowledge without taking any risks. To browse the complete list of titles, visit this page: Free Estate Planning Reports.
Latest posts by Timothy P. Murphy (see all)
- Dividing Your Estate Unequally among Your Children - January 18, 2020
- Estate Planning for Blended Families: A Necessity - January 16, 2020
- How Your Estate Planning Attorney is Similar to Your Eye Doctor - January 14, 2020