You worked hard to build up your assets and resources so that you and your family could have a better life. Now that you’re starting to think about your mortality, you’re worried that those assets will be frittered away quickly after you are gone. You’d much prefer that your heirs put all that money to good use instead.
An incentive trust might offer a solution. These kinds of conditional trusts are tied to specific actions. But incentive trusts aren’t always a good idea. The more explicit your requirements are, the more you tie the executor’s hands and eliminate discretion and the worse the outcome can be for your heirs.
For example, maybe you want your grandchildren to use the money you leave them for college. That’s admirable, but a trust that ties the disbursement of any funds solely to a college degree could be useless for your heirs in a number of different circumstances.
What if one of your grandchildren is injured or develops an illness that makes higher education an impossible dream? The money you left in the trust would be better used to make their life more comfortable, but they wouldn’t have access to it. Similarly, what if one of your children wants to open their own business or go to trade school instead of college? You may be fully supportive of these ideas, but your trust wouldn’t reflect that.
Trusts can accomplish a lot of different goals when they’re prepared correctly. Talk to your attorney about your intentions. There are many different ways that estate plans can help protect the wealth that you’re passing on.
