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How an incentive trust can help motivate your loved ones

On Behalf of | Apr 9, 2024 | Estate Planning

You can make your estate plan go to work for you rather than simply being a vehicle to transfer assets upon your death. A great example of this is the incentive trust. Here, you create a trust, name a beneficiary, and place conditions on the release of the trust’s assets to that beneficiary. As a result, you can guide a beneficiary’s behavior to align with whatever goals you want them to achieve.

What conditions can you place on an incentive trust?

The options are nearly limitless. Some people require that their beneficiary graduate college or hold a full-time job for a specific period of time, while others place marriage and the birth of a child as a condition on asset release. Others want to see a loved one complete substance abuse treatment or some other form of counseling prior to assets being released, so they make the completion of those programs a triggering condition.

Are there risks associated with using an incentive trust?

There can be if you aren’t careful. For example, if your named beneficiary becomes disabled after your death and is no longer capable of meeting the condition placed on the release of trust assets, then they may be blocked altogether from receiving the assets you intended for them. Therefore, if you’re going to create an incentive trust, you should make contingency plans and consider worst case scenarios.

Don’t miss out on beneficial estate planning options

There are several different ways to approach the creation of your estate plan. You have to find the avenues that are right for you and those you care about. So, before finalizing your estate plan, make sure you have a full understanding of your estate planning options and how to best use them to your advantage.