Do you worry that a family member may squander money you leave him or her? An Incentive Trust is a legal document you can create to disperse funds over time or as life goals are met. An incentive plan is a great way to encourage a child or grandchild to succeed in life and to teach them financial responsibility.
Encourage Life Goals
An Incentive Trust may encourage your loved ones to pursue their life goals and reach success without depending fully on an inheritance. Leaving an inheritance for your children and grandchildren may provide them with a comfortable lifestyle, but sometimes we worry that our heirs may not pursue their own dreams because they’re “too” financially secure. In this case you can use a Trust to reward that family member each time a semester of college is finished or when a certain amount of time has passed successfully employed.
Help Teach Financial Responsibility
Many people have the urge to spend money as soon as they get it. If you have a loved one who fits this profile, but you want to ensure that person will have financial security for life, you can use an Incentive Trust to slowly disperse funds and hopefully teach financial responsibility. By dispersing money over time, you can also help your loved one pay for different phases of life: college, buying a new home and starting a family.
Communicate with Loved Ones
When you create an Incentive Trust, it is important to include your family in the decision- making process. It would be unfortunate to stipulate that all grandchildren must go to college to receive their money and then have one grandchild left out because he or she did not wish to pursue higher education. Instead of setting goals for your family members, speak with them about what goals they have and use those goals in your Incentive Trust. This will help you avoid resentment from family members who may feel you are trying to control them after your death.
Paul A. Kraft, Estate Planning Attorney
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.
Latest posts by Paul A. Kraft, Estate Planning Attorney (see all)
- If a Beneficiary Dies During Probate What Happens to the Inheritance? - September 18, 2019
- Is Your Power of Attorney Powerless? What to Do When a Third Party Won’t Honor an Agent’s Authority - September 11, 2019
- Are There Different Types of Special Needs Trusts? - September 4, 2019
