Clients are often legitimately concerned that their loved ones will squander the inheritance that they receive. In order to avoid the risk of an heir mismanaging his or her inheritance a client might want to consider setting up an incentive trust. These trusts create incentives for the heir to exhibit good behavior by imposing certain conditions. For example, a client might set up an incentive trust that would reward a beneficiary for staying away from drugs and alcohol. Another example might be an incentive trust to pay for a person’s education provided that they maintain a certain academic performance. Incentive trusts can give a client peace of mind by providing them the control needed to continue protecting their loved ones long after they pass away.
See Harry S. Margolis, Incentive Trusts: Long Arm of the Dead?, Resourceful Law, August 4, 2015.
Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.
