What happens to your estate after you pass away? With an estate plan, you can choose beneficiaries to inherit your assets. However, you can’t always control what your loved ones will do with your assets—unless you create an incentive trust.
An incentive trust allows you to set conditions and incentives for your beneficiaries to meet before they can access trust funds. The terms in an incentive trust can help your beneficiaries reach certain goals. Here are some possible ways you can use an incentive trust:
Putting a loved one through college
You may have a beneficiary whom you wish would go through higher education. College can be expensive, however. You could set terms in your incentive trust to fund a loved one’s education only if they are actively enrolled in college. A beneficiary may have access to trust funds based on their grade point average–the higher the GPA, the more trust funds are distributed to a beneficiary.
Helping a loved one stay employed
Your loved one may struggle to stay employed. You could use an incentive trust to match every dollar your beneficiary made, which could encourage them to find work and maintain employment.
Financing a loved one’s wedding
You could help a loved one finance their wedding by setting up an incentive trust. The incentive trust could distribute funds to cover the cost of the venue, catering, travel expenses and the wedding dress.
Setting the terms of an incentive trust can be difficult. It is important to choose your words wisely so that your beneficiary can access trust funds. Professional legal guidance can help you draft your incentive trust.