Many people have concerns about providing some of their heirs with too much, too fast, and this is a legitimate “pleasant problem.” We have all heard about high profile individuals who appear to have it all and yet are struggling with personal problems. Sometimes these individuals are able to overcome their demons, and other times they’re not so fortunate.
Indeed, money does not solve every problem, and sometimes a large windfall of financial resources that you did not earn can cause more harm than good. And even short of an individual becoming self-destructive, a person can subtly lapse into a comfortable-but-nonproductive lifestyle that is not altogether positive.
One way to give a loved one a nudge in the right direction would be to make this individual the beneficiary of an incentive trust. When you create a trust agreement, you will appoint a trustee to administer the funds and the trustee can often be a bank or a trust company. Your trust agreement could then include conditions that must be met by the beneficiary before the trustee is authorized to distribute financial resources.
In other words, an incentive trust is an inheritance with “strings attached.” Some people may resent being given such conditions in order to receive their inheritance. However, an incentive trust can assuage your concerns and, if it is constructed in a sensitive manner, the beneficiary should be able to understand that you created such conditions in order to help support that beneficiary’s good decisions and accomplishments.
To find out more about how an incentive trust may fit into your estate plan, simply take a moment to arrange for a consultation with an experienced Cupertino area estate planning attorney.
Roy has an undergraduate degree in accounting from Indiana State University, and a Juris Doctor degree from Indiana University. He graduated from law school in 1973. Roy was a member of the legal fraternity of Phi Delta Phi and president of the local chapter at Indiana University Law School in 1972-73. In law school he was a recipient of the Dean Faust Award and received awards and honors in income taxation and estate and gift taxation.