There are some ways in which you can use a trust in your estate plan to dictate the behaviors of your beneficiaries, even after you’ve passed away. You can do this by using an incentive trust that gives them certain goals to meet or actions they can take to maximize their own inheritance.
One example of this is to pick a concrete goal that they need to accomplish before they can access their trust fund, such as obtaining a college degree. Maybe you’re worried that giving them a large inheritance will cause them to abandon their educational goals and live off the money. But if you say they can’t withdraw any of the funds until they have a degree, then they remain dedicated to their studies—perhaps far more dedicated than someone who doesn’t have such a significant financial gift waiting for them after they graduate.
Promoting hard work
Many people are also worried that their beneficiaries are going to stop working hard or putting in effort in their careers once they receive their inheritance. But an incentive trust can do the opposite.
For instance, perhaps the person can take a yearly withdrawal from their trust—but the maximum amount they can withdraw is equal to their earnings from the year. If they quit working, then they can’t live off the trust. But if they work hard, get promotions and raises, and begin earning even more, they are rewarded by even bigger payouts from the incentive trust.
These are just two examples of how you can use a trust to distribute your assets and influence your beneficiaries. Just take the time to look into the legal steps necessary to set up your estate plan.
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