If you want to have the advantages of a trust but greater control over the assets within it, an incentive trust may be the right tool for your estate plan. Here is a quick guide to how these trusts work and the different benefits they offer, from an estate planning attorney in New Jersey.
What is an Incentive Trust?
This is a legally binding trust where the trustee holds and manages the assets granted to the trust by the grantor. Unlike other trusts, the trustee must adhere to specific requirements and meet certain conditions that the grantor sets out in the formation of the trust in order to receive funds.
These trusts are therefore useful as a means of the grantor to provide funds for a specific purpose for a trustee. For example, a grandparent may want to leave an inheritance to a grandchild but not want them to become reliant on the funds for their living. The trust can then be set up to only provide funds when the grandchild has achieved a certain level of education.
Another good use of this type of trust is to ensure that your children or grandchildren are ready to handle their inheritance before they receive it. This can mean portioning it out at different stages of their life according to their age or life events (graduation, marriage, first child) and specifying different uses for it (buying a property, funding education or healthcare, or even funding their retirement).
Passing on Family Values and Responsibility, Not Ruling from the Grave
Because an incentive trust gives the grantor very specific control over the distribution of the trust’s assets, it can be used to rule from the grave – which is understandable but not advisable. After all, it is difficult to know or understand the personal challenges and economic conditions facing the generations that come after us.
However, if done with careful thought and input from trusted advisors, these trusts can support your heirs rather than control them. By aligning your conditions with your values and allowing trustees to develop their own sense of financial responsibility, your heirs can be guided to their own success.
Develop an Estate Plan that Supports and Cares for Loved Ones with Your Estate planning attorney in New Jersey
At Sedita, Campisano and Campisano in New Jersey, estate planning attorney Frank Campisano is ready to assist you with all your estate planning needs – whether you need to make a business succession plan, a personal estate plan, Last Will and Testament, Power of Attorney, a Living trust or to minimize inheritance tax on your estate.