An incentive trust is one way to influence your heirs (for the better) after you have passed away.
You are working on your estate plan.
However, you come across one issue.
Your heirs are irresponsible.
You do not trust them with an outright inheritance.
What can you do?
According to an article in The Norman (OK) Transcript titled “Incentive trusts can motivate your heirs to better themselves,” an incentive trust could be a great option for you.
You can provide for your heirs, but the qualifying for the money is their responsibility.
By putting your money for certain heirs into an incentive trust, you can set stipulations regarding disbursements.
What king of stipulations?
The heir could receive the inheritance if he or she accomplished something, such as graduating from college or holding a job.
Similarly, you could require the heir to abstain from something, such as drugs or alcohol.
If the heir refuses to stay clean, you can send payments directly to rehab rather than the heir so the money is allotted for recovery rather than fueling his or her addiction.
Still, incentive trusts may raise issues you do not want in your estate plan.
An incentive trust could unduly hurt an heir if a stipulation called for full-time employment ... but serious illness or a major accident took away his or her ability to meet this criteria.
Also, if you try to include an incentive to force a specific religion or nullify a marriage, your estate plan could be dismissed by a judge.
When creating an incentive trust, you may want to include provisions giving the trustee freedom to make discretionary decisions concerning your trust and its terms.
Ultimately, you will need to work an experienced estate planning attorney to draft a trust to meet your needs.
So, how do you find an "experienced" estate planning attorney?
First, ask around. Friends, family and other professional advisors are trustworthy sources.
Second, conduct an "organic" search on "Google" for "estate planning" near you (e.g., "Estate Planning Anytown MoKan").
Third, either way, verify! Check out the education, experience, ratings and client reviews of any attorney before you contact him or her.
In fact, I use both of these services to thoroughly vett attorneys before referring members of our "client" family for legal help in other areas of law or for matters in jurisdictions outside Kansas or Missouri.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: Norman Transcript (November 1, 2016) “Incentive trusts can motivate your heirs to better themselves”