Do I Want a “Trust Fund Kid?”
The term trust fund kid can conjure up some undesirable images: entitlement; laziness; and pastel plaid shorts. Even though trust fund kids currently account for only around 1% of the population they aren’t just for the extra-wealthy anymore. More and more middle-class families are seeing the benefit of avoiding probate and planning for specific distribution of their assets at their death. Anyone whose assets include real estate, stocks, or bank accounts should consider a revocable trust as part of a sensible and complete estate plan.
There are many advantages. You are able to ensure that your hard-earned assets are distributed as you wish and that they are protected (to a certain degree) after your death. Another advantage is that you can provide an incentive for your children to do well. Rather than give your child money all at once or even at specified intervals, restrictions can be imposed requiring that certain goals be met in order for a distribution to take place. For example, you might require that a certain grade point average be achieved or graduation from a 4-year university be attained before a specific distribution is made. Or you can reward your child if specific requirements are met.
Include Incentives in Your Document
Incentive trusts have become increasingly common but they do have drawbacks. You can’t always foresee all future problems or roadblocks such as medical emergencies, family demands or financial hardships. Effectively creating an incentive trust requires much thought and deliberation over how your hopes and goals for each individual child could play out. But regardless of your financial circumstances, it is wise to consider crafting your trust to encourage education, hard work or other desirable behavior.
If you want to learn more about Incentive Trusts, click here to schedule a phone call or in-person consultation!