Obviously, a trust is a way to pass money and assets on to your heirs. However, that’s just one of the things you’re interested in giving your children. You’re also hoping to pass on your values, molding your kids into the type of people you want them to be. Can a trust be used to do this as well?
In some ways, that’s exactly what an incentive trust does. It gives you the ability to set up any incentives that you want — within reason, of course, as things that are illegal or outlandish may not be upheld. The trust only pays if the children meet those goals.
For instance, perhaps you want your children to work with charities and social causes. It’s always been important to you to give back and try to make the world a better place. Their involvement could help them earn these payouts.
Maybe you’ve always really valued a college education. You don’t just want your kids to get an undergraduate degree, but you hope they’ll stick it out through grad school, as well. The trust could pay out only upon graduation.
One thing to consider, though, is what this type of legacy means. Is it worth it to you to have your children stay in school or work on social causes if they’re only doing it for the money? The trust may influence their behavior, but it may not change what they really think is important. Pick your goals carefully, and be sure you know all of the legal options you have to distribute assets with trusts.
Source: Huffington Post, “Passing Values, Not Just Money, via Incentive Trusts,” Steve Cook, accessed May 17, 2017