If you are finding it difficult to get motivated about your estate planning, you are not alone. Many people are reluctant to spend time considering how life will go on after they have died, and this may be especially hard if you have potential heirs who may not be able to handle the inheritance you plan to leave.
It is true that only writing a will and leaving your assets in lump sums to your loved ones could be a recipe for disaster. Fortunately, there are ways to disperse your wealth and motivate your loved ones at the same time.
Rewarding good behavior
Incentive trusts are popular estate planning tools for people who desire to encourage positive actions in their children or grandchildren. You can structure your living trusts to reward your beneficiaries for achieving certain goals or deny them access to funds if their behavior is outside the scope of the trust. Some examples of uses for an incentive trust include the following:
- Encouraging healthy living: You may restrict funds if an heir has an addiction and release funds for a beneficiary who completes a rehab program.
- Holding money for minors: The trust may allow heirs to receive a small portion of the inheritance until they reach an age when they can manage it with maturity.
- Promoting a family business: Your plan may provide an incentive for an heir to continue the business you built.
- Motivating a work ethic: You may structure the trust to match the earnings of an heir who finds and maintains employment, or for a beneficiary who chooses a career in a benevolent field such as teaching.
Having a frank discussion with your heirs may eliminate any hard feelings or misunderstandings your incentive trust may evoke. For example, you don't want your beneficiaries to think you are trying to control them from the grave or setting goals they cannot possibly reach.
Your estate plan may open doors for your heirs
The benefits of a living trust are numerous, and you may find there are options you had not thought of including in your plan. However you plan to set up the trust, you will want to allow some flexibility for circumstances you may not be able to predict. Your attorney can help you with the legal language that will make that possible.
A consultation with an estate planning attorney to discuss your questions and concerns about your assets and your future is worth planning sooner than later. Having your wishes known and your trust established will bring you peace of mind and provide security and structure for your heirs.