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The upside to an incentive trust

On Behalf of | Oct 6, 2020 | Wills & Trusts

One of the most controversial types of trusts is an incentive trust. It’s not ideal for every family or every situation. However, it is a powerful tool when doing your estate planning, so it’s worth considering. 

What Does It Do?

The incentive trust will give conditions to your heirs. Only when they are met will the trustee give that person their money. For example, you could leave someone $100,000 that they only get under the condition that they stay in school until they graduate. If they drop out, the money goes to charity. 

Why is it controversial?

It’s controversial because it is so controlling. Your heir may resent that control. If what you want for their life is not the same as what they want, they can feel like you are either forcing them to live differently or taking away their inheritance. 

What is the benefit?

The benefits of this can be massive, though. You may be far older than your heir. You have more life experience. You can help to guide them. Looking back, your heir may be very happy that you helped them decide to stay in school, get an education, start a career and have a successful life. They may not have felt the same at 18 years old, but they may feel that way at 35, and they’ll look back fondly at both your assistance and the assets you left them. 

What are your options?

If you are getting started with your estate planning, be sure you really think through all of the options you have to set up a plan that addresses what your heirs need the most. 


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