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Making use of an incentive trust

On Behalf of | Jul 9, 2024 | Trust |

There are many different kinds of trusts you can add to your estate plan. One you may be interested in if you want to protect your assets from misuse is an incentive trust

An incentive trust allows you to make clauses that your beneficiaries must meet if they want to access funds. Here is what you should know:

5 examples of incentive trust clauses

It is important to know what restrictions you want to add to your trust. If you are too strict, your beneficiaries may never gain access to funds. Yet, if you are too lenient, your beneficiaries may access funds without respecting your wishes. Here are a few examples of incentive trust clauses: 

  1. Education: Funds could be accessed if a beneficiary is enrolled in higher education. They may have access to funds to pay for books, supplies, rent and tuition. Funds could be dispersed proportionally to a beneficiaries grade point average (GPA).
  2. Marriage: A beneficiary may receive funds if they marry. This one-time disbursement could help pay for wedding expenses.
  3. Children: A beneficiary could access funds if they have children. This clause could help a beneficiary afford supplies for their child.
  4. Employment: You could encourage a beneficiary to stay employed with an incentive trust. The beneficiary could receive equal funds to their salary. 
  5. Drug Addiction: If a beneficiary has a substance abuse problem, an incentive trust could help them stay sober. The beneficiary could access funds upon successful drug tests. They may be barred from funds if they actively use drugs.

Legal guidance is available to help you create a sound incentive trust.