Do you want to leave your assets to one of your heirs, but are you worried to, just leave them the money outright? Maybe you want to put certain conditions on it so that you can influence how they live. You want to give them that direction and motivation.
You can do so. One option is to use an incentive trust. You set the conditions, and they only get the money if they meet those conditions, thereby giving them an incentive to do so.
For instance, maybe you have a child who is going to law school. It’s tough, but you know they can do it. You worry that, if you just give them your money directly, they’ll give up on that career and drop out of school. You don’t want the money to be an excuse for them to step away from their dreams and goals.
The incentive, then, could be graduating from school. If they do that and become a lawyer, then they can have the money from the trust. They can use it as they wish, perhaps to set up their own firm.
Of course, you do want to consider other things that could keep them from graduating. Say they get into a car accident and cannot return to school due to their injuries. You may want to set the trust up so that it has exceptions for these types of situations.
Trusts give you a lot of options. An incentive trust is just one type. Make sure you know how they work and what options exist for you and your family.
