One of the fears that many people have as they draft their will is how their assets will be used. Many people have worked hard to build up their estate and they often do not want it wasted on poor investments.
While a will has the purpose of managing assets after the testator passes away, many people can benefit from making a trust as well. A trust is a legal document that allows a trustor to make an arrangement with a trustee to manage and organize assets. With the right trust, the trustor can control how their assets are used.
One such popular legal document is an incentive trust. Here is what you should know:
How to use an incentive trust
An incentive trust allows the trustor to set conditions that must be met before the trustee distributes assets to beneficiaries. Here are a few conditions that can be set with an incentive trust:
- Marriage: The beneficiary must be married to earn trust funds. These funds could help pay for certain financial commitments for a marriage, such as for venue, catering, outfits and a honeymoon trip.
- Childbirth: The beneficiary could access a trust only if they have a child. The beneficiary could then use these assets to pay for medical bills, child expenses and school.
- College: The beneficiary may need to be in college before they can access a trust. The trust could give the beneficiary assets proportional to their grades. This could help them pay for tuition and other college expenses.
If you think you could benefit from making an incentive trust, then it can help to reach out for legal guidance.