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Can You Include Incentives in Your Estate Plan?
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Can You Include Incentives in Your Estate Plan?

July 26, 2022 by Steven Oakley

incentive trustThere are many tools in the estate planning toolkit, so you never have to settle for an arrangement that is less than ideal. As a layperson, there is no reason why you would understand all the different steps that can be taken.

An estate planning lawyer can explain your options to you, and this is why legal assistance is invaluable. With this in mind, we will be looking at some of the legal devices that can be used to satisfy specific aims in some upcoming posts, and we will start with the incentive trust.

Loving Guidance

If you leave a loved one an inheritance that can have a life changing impact, they could choose a path that is detrimental in some way. For example, someone that hasn’t attended college may decide that it’s not necessary because they will go through life with a financial underpinning.

You can respond to a circumstance like this one through the creation of an incentive trust.

To continue with this example, you could fund an incentive trust and name the young family member as the beneficiary. You would also designate a trustee to administer the trust. This can be any adult that is willing to accept the role, but you can alternately use a trust company or the trust department of a bank.

In the trust declaration, you can include stipulations that must be met before the trustee would be authorized to make distributions to the beneficiary. You could instruct the trustee to pay tuition and fees and cover living expenses as long as the beneficiary is a student in good standing.

You could go on to offer a lump sum bonus as a graduation reward. You could sweeten the pot with regard to the amount of the distributions if the beneficiary attends graduate school.

To instill a work ethic, the trustee could be given the directive to match every dollar that is earned on the job by the beneficiary after graduation. Ultimately, you can allow for large lump sum distributions when the beneficiary reaches certain age thresholds.

This type of trust can also be used to guide someone away from self-destructive behavior. For instance, a beneficiary with a substance abuse problem could be required to complete a treatment program and submit to periodic testing.

These are a couple of basic examples that demonstrate how an incentive trust can be used, but you have broad latitude. You can essentially include any stipulations as long as you are not requiring the beneficiary to do something that is illegal.

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We go the extra mile to provide educational opportunities to members of our community. This blog is updated on an ongoing basis, and there are other written materials that you can access for free on this site.

In addition to these resources, we offer webinars, and this is another free opportunity to build on your knowledge. Though there is no charge to attend our webinars, we ask that you register in advance so we can reserve your spot or choose an on-demand webinar.

To see the schedule and obtain registration information, visit our webinar page. Once you identify the session that works for you, follow the simple instructions to register.

Need Help Now?

If you are ready to take the final step, we are to help. You can send us a message to request a consultation appointment, we can be reached by phone at 818-937-2335.

 

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Steven Oakley
Steven Oakley
Managing Attorney at The Oakley Law Group
Steve is a father of five, a member of the Jonathan Club, veteran of the United States Army and spends his free time dabbling in aviation and supporting several non-profit organizations including, Freemasons of California, Scottish Rite Language Centers, the Burbank Noon Kiwanis Club, Quake Safe Seniors, UCLA Alumni Scholarships, and the Shriners’ Hospitals for Children.
Steven Oakley
Latest posts by Steven Oakley (see all)
  • There Is No One-Size-Fits-All Estate Plan - March 24, 2023
  • Top 5 Reasons to Use a Living Trust - March 22, 2023
  • Can I Give Inheritances While I’m Living to Avoid Estate Taxes? - February 17, 2023

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