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Should You Include an Incentive Trust in Your Estate Plan?

01/06/2023 | Wills

As you watched your children or grandchildren grow, you had a vision for their lives. Perhaps you thought they would attend college, work in a particular field or get married by a certain age. As you prepare your estate plan, you may wonder whether you can provide an inheritance as an incentive for each of them to achieve the goals you envision for them.

You can create an incentive trust that would make receiving distributions from the trust contingent upon them completing a certain goal. The question is whether you should, whether you can count on the trustee to abide by your wishes and whether it would be legally enforceable.

Clarity is important

In order to make sure everyone is clear on the provisions of the trust, you may want to make sure you structure it properly. Expressing your thoughts, wishes and philosophy in a statement within the document may help the trustee to understand what you want done. This could prevent any misinterpretations of what you want.

You may provide the trustee with detailed instructions on what you want done, but at the same time, you may want to address any contingencies that could arise so that your trustee has some discretion. Life does not always work out as people want it to, and your child may be incapable of meeting the conditions you include in the trust due to unforeseen events in his or her life.

Doing so could still allow your child to benefit from the trust as long as the trustee is satisfied that meeting the conditions of the trust is impossible. Of course, you can’t account for every twist and turn your child’s life can take, but if you can address any major ones that apply to the incentive, that would help. Thereafter, you will have to trust the person you appointed to carry out your wishes.

Properly setting up an incentive trust

If you want to use this type of trust, it would be a good idea to work with an experienced attorney at the Law Offices of Alice A. Salvo to make sure that it meets your goals, does not violate any laws and includes all of the language necessary to keep the trust valid. You may also receive some guidance regarding choosing a trustee who can and will follow your instructions and use the appropriate amount of discretion when needed. Doing so could put everyone’s mind at ease.