Should an incentive trust be part of your estate plan?

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Should An Incentive Trust Be Part Of Your Estate Plan

Deciding how to leave your assets to your loved ones can be a challenging endeavor. After all, your familial relationships and your loved ones’ individual needs may justify something other than equal distribution of your assets. In some instances, estate planners find themselves concerned about how their assets will be used once handed down. If you find yourself in this position and are worried about your estate being squandered away, then you may be wondering what you can do to protect the wealth that you’ve worked so hard to accumulate.

What is an incentive trust?

One option at your disposal is the incentive trust. Here, you place assets into a trust that specifies periodic disbursement to a named beneficiary. The bulk of the trust’s assets won’t be released, though, until a triggering condition is met. This gives you the ability to control the named beneficiary’s behavior to a certain extent, which can better ensure that your wealth is more properly handled.

What conditions can be placed on an incentive trust?

You have a lot of discretion when it comes to placing conditions on one of these trusts. You may want your loved one to complete a financial literacy course or hold full-time employment for a certain period of time, or you may want your beneficiary to get married or have children before the trust’s assets are released. You can be creative here, so carefully think through the terms that will make you feel comfortable leaving your assets to your loved ones.

Know your estate planning options

An incentive trust is just one way that you can go about leaving your assets to your loved ones in a responsible fashion. There are a lot of other estate planning vehicles at our disposal, though, so make sure that you know the breadth of your options so that you can choose the estate planning strategy that makes the most sense for you and your loved ones.


Michael Ritigstein is a Founding Partner of the firm concentrating his efforts in supporting the firm's litigation, corporate and estate matters. Mr. Ritigstein graduated from the University of Delaware in 1996 and Seton Hall University School of Law in 2000. In 2007 he received a Masters of Law in Taxation with a concentration in Estate Planning, from Temple University's Beasley School of Law.

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