Sometimes it isn’t as easy as leaving everything to your kids… do you need an incentive trust?
Regardless of your wealth, all of our family dynamics are different. You may have children that you want to leave everything to, but there may be one thing holding you back. Considering the maturity of your trustees is important when creating your estate plan. If you aren’t sure that your children would be able to handle an inheritance, or the responsibility of executing your estate, there is the option of an incentive trust. With an incentive trust you can put certain stipulations in place so your trustees would receive their inheritance once they meet the criteria that you set. Here are some reasons you may need an incentive trust:
Reasons to Consider an Incentive Trust:
You Have Young Children
Naming a guardian for minor children helps to protect them from being placed with someone not of your choosing if something were to happen to you. Aside from naming a guardian, you can also create stipulations as to when they would receive their inheritance. You can go by certain ages, or even leave certain amounts of money to be disbursed after certain milestones. For example, you could leave a certain amount of money to be disbursed upon the child graduating from high school or college. You can also set their inheritance to be disbursed in certain percentages at certain ages or milestones so they aren’t getting everything at once.
Your Loved One isn’t Financially Responsible
Maybe you have a beneficiary who isn’t that great with money, even though they’ve already hit other milestones you have in place. It’s hard to imagine that they would waste away their inheritance, but in this case you could request that certain things are done with the money. You could ask that it be put into a retirement account, or used for certain investments or education. Another situation to consider would be if you have a loved on struggling with other personal issues, like addiction. As hard as it is to talk about, giving someone with an addiction problem a large sum of money may be detrimental to their situation. With an incentive trust you can make the decision as to when they would receive their inheritance.
Let us help you feel at peace with your estate planning decisions. Contact us and see how we can help.
Disclaimer: This article is intended to serve as a general summary of the issues outlined therein. While this article may include general guidance, it is not intended as, nor is a substitute for, qualified legal advice. Your review or receipt of this article by Lexern Law Offices, Ltd. (the “LLG”) or any of its attorneys does not create an attorney-client relationship between you and the LLG. The opinions expressed in this article are those of the authors of the article and does not reflect the opinion of the LLG.