Estate planning is not always a simple and straightforward matter. If you have someone on your inheritance list that is not ready to handle a large amount of money, you would rightfully have concerns.
Under these circumstances, it is possible to maintain a significant degree of “dead hand control” through the utilization of an incentive trust.
Guiding Choices
You can use an incentive trust to guide a beneficiary toward choices that you would like to see them make. The first step is to fund the trust and name a trustee to act as the trust administrator. It can be someone that you know personally, but it is also possible to use a professional fiduciary.
Banks and trust companies provide trustee services, and some attorneys, financial advisors, and accountants can be engaged to act as trust administrators. Because of the nature of an incentive trust, you would definitely want to choose a trustee that has no personal interests.
To explain by way of example, let’s say that you have a young person on your inheritance list that has not started college. You could make this individual the beneficiary of an incentive trust and leave distributions instructions for the trustee in the trust declaration.
Under these hypothetical circumstances, you could allow for the payment of tuition and other expenses while the student remains in school. Perhaps you could allow a lump sum distribution after graduation, along with a dollar for dollar match of on-the-job earnings.
This is just one example, and you can also use an incentive trust to guide people away from destructive behavior. Someone that has a substance abuse problem could be required to undergo treatment and provide proof of staying clean on an incremental basis.
The terms of an incentive trust are entirely up to you as long as you are not requiring the beneficiary to do something that is illegal.
Explore Our Special Reports
Since you find yourself on this website, you must be looking for information about important elder law and estate planning topics. We regularly update this blog with new content, and there are hundreds of existing posts that you can access at any time.
In addition to the blog, there are other written resources on the site. One of them is our library of special reports. These reports cover a wide range of important topics, and they are very informative but easy to understand.
You can access any or all of them for free, and you can visit our special reports library to see the titles.
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We place an emphasis on education, because we have found that people take action for the benefit of their loved ones when they have sufficient information. In addition to all of the resources that we have here on this site, we also conduct workshops on an ongoing basis.
These sessions have always been a great way for people to interact in person with an estate planning attorney from our firm. Unfortunately, we have been forced to put them on hold because of the social distancing guidelines that we are living under at the present time.
However, all is not lost because of the wonders of modern technology. We now are offering webinars, so you can get the same rock solid information without taking any risks.
To get all the details, visit our webinar page and follow the simple instructions to register for the session that fits into your schedule.
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