A trust is a legal document that allows you to make specific requests about how your assets are managed. You could, for example, put aside funds for charities, pets or grandchildren with a trust. One popular kind of document is an incentive trust.
An incentive trust limits a beneficiary’s access to funds unless they meet a unique clause. As the truster, you can make this unique clause as you draft an incentive trust. Here are a few creative uses for an incentive trust:
Funding wedding expenses
You may be adamant about your child getting married. You could set aside assets in an incentive trust that can only be accessed if your child gets married, for example. The funds could also be used to fund wedding expenses, such as venue, catering and outfits.
Encouraging a beneficiary to seek higher education
Education may be important to you. You could encourage a beneficiary to seek higher education by creating a clause in an incentive trust. The clause could state that a beneficiary can access a fraction of the funds in a trust proportionate to their grates.
Limiting a beneficiary’s substance abuse
A beneficiary may have a substance abuse problem. An incentive trust could be used to encourage a beneficiary to work on their addiction problems. The access to the trust’s funds could be terminated if the beneficiary is found using substances.
It is important to get the wordage just right as you make an incentive trust. If a clause is too specific or too vague, then a beneficiary may never access their trust’s funds.