Many movies show a character trying to receive a trust or an inheritance by achieving a specific goal set by the deceased. In movies it is often to get married or finish college. Trusts like these are actually real and not just something Hollywood came up with. In reality, you can set Incentive Trusts for your heirs in the event that they achieve a goal that you believe they should strive for.
Trusts as an Incentive
The idea of an Incentive Trust is a fairly simple one. You want to make sure your grandchild has funds to succeed after reaching a goal such as marriage. In your estate plan, you establish a trust that will be granted to that grandchild in the event that they become married after your death. These trusts are meant to be used as a way to encourage an heir to do something that you believe will be best for them. Incentive Trusts can be set for a number of goals or situations. For instance, you can set a trust to grant funds to your heir when they achieve a set number of community service hours or for doing charitable work.
The trust may also have specific requirements built into them. This can be a number of items set by you. Common prerequisites are deadlines, drug tests, no criminal behavior, community service hours and more. For marriage Incentive Trusts, you may want to require the marriage take place at the family church or by a certain age.
Interests vs. Situations
It can be important to identify what you want your heir to achieve, as opposed to how you think they should do it. Meaning, you may want to set an Incentive Trust to be a bit wider reaching for your heir. Not everyone will go to college. Rather than setting a trust to be available after graduating from college, you may want to establish it to be obtained once your heir becomes self-sustaining. Maybe your heir wants to learn a trade rather than get a degree.
Your estate attorney can help you determine what goals you may want to set and what avenues your heir can take to achieve them. Interests are broader goals that you would like for your heir; such as “to be self-sustaining.” Situations are more narrow focuses for the trust, such as “to graduate from a 4-year college.” Work with your estate attorney to determine what is the best way to establish the trust that you want for your heir.
For more than 40 years, our firm has been assisting people like you with long term care and estate planning needs. We bring you the knowledge and resources to protect you and your family. Armstrong & Lamberti, PLLC do not provide tax, legal, or accounting advice by articles. This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Call 718.477.7700 or contact us online to schedule a free initial consultation with an estate planning attorney at Armstrong & Lamberti, PLLC. We proudly serve Staten Island, Brooklyn and the other boroughs of New York City.