Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

A Member of the Law Professor Blogs Network

Monday, May 12, 2014

Incentivizing A Trust

Incentive

Many parents often worry how their children will use their assets after they are gone. If concerns exist as to whether children will make wise decisions in the future, estate-planning practitioners can suggest creating an incentive trust.  The incentive trust attaches incentives and conditions to money that you leave to your beneficiaries. 

While it is possible to put incentives in a will rather than a trust, a will goes through probate and your wishes are made public.  Alternatively, a trust is private.  A typical trust usually covers health, education, maintenance and support; however, the incentive trust adds conditions.  For example, your kids receive $1,000 a month IF they finish college.  These trusts are a great way to “motivate responsible behavior by the next generation.” 

The most effective incentive trusts are ones that address as many “what ifs” as possible.  Incentive trusts prove to be especially productive for kids with problems.  However, be sure not to punish “the good kid.”  If a certain amount of money is given to a kid who repeatedly needs rehab, then the good kid should also receive money. 

See Leslie Mann, Making Sure Your Kids are Trustworthy, Chicago Tribune, May 8, 2014.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

http://lawprofessors.typepad.com/trusts_estates_prof/2014/05/incentivizing-a-trust.html

Estate Planning - Generally, Trusts, Wills | Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341bfae553ef01a3fd051cc9970b

Listed below are links to weblogs that reference Incentivizing A Trust:

Comments

Post a comment