Wills, Trusts & Estates Prof Blog

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

Monday, May 12, 2014

Incentivizing A Trust


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.


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