Are you worried about what’s going to happen to your assets once you’re gone and they’ve been passed on to your loved ones? If so, take comfort knowing that this is a common concern amongst estate planners. These individuals often fear that the lifetime of wealth that they’ve worked hard to build will be squandered in a matter of years, and that the wealth will disincentivize their loved ones from living an active life where they meaningfully contribute to society.
But there are estate planning steps that you can take to alleviate this concern. One of them is implementing an incentive trust into your estate plan.
How an incentive trust works
Here, assets are placed into a trust with the expectation that periodic payouts will be made to a named beneficiary. The bulk of the trust’s assets won’t be paid out, though, until an identified condition is met. This allows you to retain some control over the assets long after you’re gone while at the same time motivating your loved one to act in a certain way.
What conditions can you place on an incentive trust?
You can get creative when it comes to placing terms on an incentive trust. For example, you may require that a loved one hold a full-time job for five years before the trust’s assets will be released, or you might want to see your loved one graduate college or get married before releasing the remainder of trust assets. You can put the conditions in place that are important to you and that you feel like will make your loved one’s life better.
Know your estate planning options
Incentive trusts highlight the customization that’s available in the estate planning process. To create the estate plan that’s right for you, you simply have to know and understand your options and how to utilize them to the fullest extent possible. To gain that knowledge, you may want to continue reading up on the subject and reach out for assistance if you need it.