Finding the best way to address your assets when considering your estate plan can prove difficult. You may need to determine who should receive certain property, how your remaining years could affect potential inheritance amounts and how your surviving loved ones could potentially utilize the funds or other property you bequeath to them. Luckily, the options available for estate planning could help you answer many of these questions.
In particular, trusts can act as useful planning tools. You could set up trusts for specific beneficiaries, and you may even stipulate when the person receives the contents of the trust and to what use the assets should go. Additionally, the use of trusts could potentially help your loved ones avoid the prolonged process of probate.
One type of trust that could help you if you feel the need to regulate how a beneficiary uses assets is an incentive trust. These trusts are so named because the contents of the trust may act as an incentive for the recipient to act in a certain way or carry out certain tasks. Because the terms of the trusts are legally binding, you could guide a loved one toward a beneficial life path while offering potential rewards for such action, even after your death.
For example, you could use an incentive trust to encourage or meet the following behaviors and stipulations:
- Pursuing education: If you hope that a young loved one may take his or her education more seriously, you may include trust terms that dictate that the beneficiary cannot receive the assets unless or until he or she graduates high school, college or meets other desired goals. You could also include terms indicating that the funds should only go toward college tuition or similar education-related expenses.
- Discouraging negative behaviors: You could also use an incentive trust to help guide a troubled family member toward a healthier life. If he or she has drug or alcohol problems, you may indicate that the trust funds may only be used if he or she maintains a sober lifestyle.
- Age restrictions: The terms of your trust also do not have to necessarily encourage certain behaviors. If you do not want a child to inherit a considerable amount of money at a young age, you may place those funds into a trust that indicates access can only be granted once he or she has reached a certain age.
You may even consider terms that have a greater specificity to your personal circumstances.
More on trusts
If you would like to find out more information on the different types of trusts, their uses and how you can tailor them to your unique needs, you may wish to utilize local New Jersey legal resources.