Incentive trusts are created to motivate beneficiaries to achieve independent financial self sufficiency notwithstanding that the beneficiary may be the beneficiary of a substantial trust. Parents who know that their children will inherit a substantial amount of property and money often worry that the children will be less interested in completing their education or pursuing meaningful steady employment because they know they have a trust fund to rely on. Parents fear their children will suffer from “affluenza.” An incentive trust is designed to reward positive and productive behaviour. For example, the trust may provide that the more money the child earns him or herself, the more money he or she will receive from the trust, or the trust can reward a child financially for diligently attending College or University or achieving certain grades. The incentive trust can also withhold trust funds if it provides that a child who fails a drug test does not get any trust money until he or she completes a drug rehabilitation programme. The point is that specific trust benefits are linked to specific behaviour or milestone achievements by the beneficiary.
Please Note: This information is not intended to contain advice specific to your situation. There are no cookie cutter solutions. After all, you are reading this information on the internet. Your situation is special and unique and you must be guided by specific individual advice from your Lawyer, Certified Financial Planner or Accountant.