Estate planning for high net worth individuals involves some added layers of decision-making. When you are in a position to provide life-changing amounts of money to people in your family you have to ask yourself some hard questions.
One of them would be whether you may be doing more harm than good by giving certain individuals large inheritances without any strings being attached. If you are relatively young and not yet established you may feel as though you have no particular incentive to reach your full potential as a human being if you have no financial concerns.
This is something that can be addressed through the creation of an incentive trust. These trusts are managed by a trustee who distributes resources to the beneficiary in accordance with your wishes as stated in the trust agreement.
The agreement contains certain stipulations. These conditions must be satisfied before distributions are given out.
They could be educational in nature, requiring the beneficiary to remain in school to continue to receive distributions. There could be a lump sum delivered after graduation and other larger distributions when the beneficiary celebrates certain birthdays, presumably reaching greater levels of maturity.
There is also the possibility of requiring the beneficiary to work as a condition that must be met. The work could conceivably be as a volunteer for a nonprofit entity if this is something that would be acceptable to you.
These trusts can provide a solution for people who have certain concerns, and you should certainly be aware of their existence as a person of means looking forward toward the future.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.