You can include a trust in your estate plan to protect your assets from misuse, challenges, probate and estate taxes. With the right trust, you could decide whether beneficiaries have limited access to funds. One such kind of legal document is an incentive trust.
An incentive trust allows you to set parameters that beneficiaries must meet before accessing their inheritance. Here is what you should know:
5 uses of an incentive trust
You have many opportunities when adding an incentive trust to your estate plan. Incentive trusts have been used for a very long time. As such, there are several common uses of incentive trusts, including the following:
- College education: You could allow a beneficiary to access trust funds if they are in college. You could also limit access depending on a beneficiary’s grade point average.
- Employment retention: If a beneficiary struggles to hold a job, you could have a trust match their income. For every dollar earned, the beneficiary inherits a dollar.
- Drug addiction prevention: You could use a trust to help a beneficiary battle drug addiction. As long as a beneficiary receives a clean drug test result, they can access a trust.
- Child care: You may want to help your children care for your grandchildren. You could use a trust to pay for any associated expenses.
- Wedding planning: If you are encouraging a beneficiary to get married, you might create a trust to help pay for any wedding expenses, such as the venue and wedding dress.
Having a well-constructed incentive trust can improve your estate plan. You can reach out for legal guidance to discuss your incentive trust options.