People work hard to build up their estate during their lives and when they pass they may desire to hand down their estate to their friends and family. Leaving property to a loved one in an estate plan can be troubling for some parents who have concerns about how their children may handle the inheritance. One of the tools at their disposal is called an incentive trust.
People can use an incentive trust as a way to encourage people to act or behave in a certain way. Instead of giving the estate to the government, the assets are placed in this incentive trust when people die. Then, the trustee can distribute the assets in the trust if the beneficiaries meet the conditions of the trust.
Examples of common conditions include graduating college, performing charity work or getting married. Some people will use trusts as a way to supplement the income of people who decide to enter service-oriented careers that might not pay well. People should be careful not to place conditions that in the trust that might be unattainable.
People who are interested in creating an incentive trust should rely on the services of an experienced estate planning attorney. The attorney can help word the trust in such a way that the trustee has the latitude to use his or her discretion in deciding which conditions are met and when. This could eliminate unintended consequences of the trust, such as someone getting sick and being unable to work full-time.
The estate planning attorney can also help their clients select a trustee who will remain fair and impartial when managing the incentive trust. An incentive trust is a powerful tool that can help people ensure that their estate is passed on to their beneficiaries in a prudent manner.