Attorneys dedicated to
personal service and quality solutions.

  1. Home
  2.  » 
  3. Estate Planning
  4.  » Unsure about leaving someone money? Consider an incentive trust

Unsure about leaving someone money? Consider an incentive trust

On Behalf of | Jan 18, 2022 | Estate Planning

No matter how often you tell your child that money does not grow on trees, they never seem to believe you. They continue to spend without realizing how hard you worked to earn it.

Thankfully all you give them at the moment is a few dollars pocket money a week. Yet, soon they will turn 18, and if you were to die unexpectedly, what is to say their attitude to money will improve?

If you have one child like that, you may be debating whether to leave them something in your estate plan or give it all to their siblings who will use it more responsibly.

Cutting one person out of the will or treating siblings unequally could cause long-term issues between them. So you may want to try incentivizing the wayward child rather than punishing them.

Incentive trusts allow you to set conditions on an inheritance

You could put the money into a trust to manage for your child. You could set it so they only get a limited amount each year or do not receive any until they reach a certain age when they may be wiser. Yet, you might feel they do not deserve anything unless they show more responsibility.

In this case, you can set a trust up to incentivize them to change their behavior.

For instance, they finish university or hold down a steady job for ten years if they want to see their inheritance. If they fail to fulfill the conditions, the trust will not give them anything.

While incentive trusts can work, some feel that motivating a child with money does not change their fundamental attitude. What you want is for them to realize the value of education, completing things, or earning their way, not to hang in there for a big payout.

Understanding more about estate planning options can help you decide the best way to look after your family while reducing the risk they squander what you leave them.