What would your loved ones do if they inherited a large sum of money from your estate? Would they use their inheritance to start their own business? Would their inheritance be used to travel the world? Would a loved one go to school and use their inheritance to pay student loans? Or, would a loved one waste away their inheritance on food, drinks and fun times?
You won’t know how your beneficiaries will use their inheritance after they pass away. However, with the right type of trust, you can protect your legacy from being mismanaged. An incentive trust allows you to set rules or conditions that beneficiaries must follow to use trust funds. Here are a few examples of how this can work:
3 ways to use an incentive trust
When drafting an incentive trust, you can decide how your legacy should be used. For example, you may want to put your children or grandchildren through school. You could set up an incentive trust to distribute funds to family members who are enrolled in school. You can also limit access to trust funds if a beneficiary performs poorly in classes.
You may have a family member who has dreamed of starting their own business. You could support this dream by setting up a trust fund to match every dollar your beneficiary makes from their business. In other words, every dollar a beneficiary earns through their business is a dollar they can take from a trust fund.
Making the most out of your estate can be made simple with an incentive trust. You can reach out for professional legal guidance to learn more.