Not all that long ago it was fairly unusual to find a trust agreement among the tools and strategies of the average person’s estate plan. Today, however, trust agreements have evolved to the point where there are so many different types of trusts it is unusual not to find one in an estate plan. With all of those different types of trust agreements available to choose from, how do you know which one is right for your plan? The surest way to know you have chosen the right trust for you and your estate planning goals is to consult with an experienced Illinois estate planning attorney when you create your plan. For now though, a better understanding of how an incentive trust works may help you decide if an incentive trust is right for you estate plan.
Just as the name implies, an incentive trust is used to provide incentive to the beneficiary of the trust to do something, or to refrain from doing something. By way of illustration, imagine that you have a child or grandchild who has been fighting an addiction to drugs, alcohol, or gambling. You might include trust terms that only allow distributions of trust assets if the beneficiary completes an extensive in-patient rehabilitation program and/or refrains from using drugs, drinking alcohol, or gambling for a specified period of time. Another good example of how an incentive trust can be used by the Maker of trust is by including trust terms that encourage a beneficiary to follow a specific educational or career path. For instance, you might provide for an extra distribution of trust assets if a beneficiary attends a specific college, majors in a certain major, or takes a job in a particular field.
Because the Maker of a trust creates the trust terms, there is almost no limit to the ways in which an incentive trust can be used by the Maker to further his/her personal ideals, beliefs, or goals. As long as the trust terms are not illegal or unconscionable, you can use any terms, or incentive, you want to push or prod a beneficiary in the direction you wish him/her to go. Of course, you will want to take extra care when choosing your Trustee to ensure that the beneficiary has complied with the terms before assets are distributed.
If you have additional questions or concerns about creating an incentive trust, or about your Illinois estate plan in general, contact the experienced Illinois estate planning attorneys at Nash Bean Ford & Brown, LLP by calling 309-944-2188 to schedule your appointment today.