Job performance reviews are commonplace among professionals as they advance in their careers. Why should it be any different when it comes to trusts? When undergoing estate planning, many parents are uncomfortable with writing a “blank check” without any conditions or requirements. Some parents are concerned that their trust will demotivate their children instead of being a tool to help advance their progress in life. There are many types of trusts, but incentive trusts can be used to reward positive behavior, and designed to discourage negative behavior.
Encouraging positive behavior
Incentive trusts can be structured to reward hard work and progress in life. Here are a few examples:
· Attending university: the incentive trust can include tuition reimbursement as long as good grades are made, and classes are passed.
· Having full-time employment: Some incentive trusts are designed to match the annual income the beneficiary makes on their own.
· Buying their first house: Clauses that help match down payments can reward saving for a home purchase.
· Getting married and having kids: Some parents want to ensure that their kids become stable through starting a family.
These are a few examples of how parents can help encourage their children to advance in life, in the way that parents would like to see.
Discouraging negative behavior
Just like positive behaviors can be rewarded, negative behaviors can also be discouraged with an incentive trust. Here are two examples:
· Drug use: If the child has a history of drug abuse, the incentive trust can include drug testing as a requirement to receive funds.
· Legal trouble: Parents can grant or deny funds based upon their child’s ability to stay out of trouble.
Parents may want to consider an incentive trust to motivate their children to advance in life according to their parent’s wishes.
Many parents believe they know what is best for their child. Developing incentive trusts, with the help of legal counsel that is experienced in estate planning, is a great option to guarantee parents’ requirements are met by their children.