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Estate planning may be challenging if heirs do not behave

It is the hope of many in Oklahoma to be able to leave a little something behind for their children or other loved ones. However, their estate planning may be complicated if those potential heirs are not ready to receive an inheritance. This could be because they have addictions, they are immature or they are simply bad with money. Some are discovering that there is a way to be generous to one's children and still hold them accountable for their behavior or choices.

An incentive trust can be a resourceful part of one's plan. Its objective is exactly what it sounds like: to provide incentive for a beneficiary to behave in a certain way. For example, an heir may only receive funds from the trust if he or she finishes college or gets married. He or she may be rewarded with more money from the trust for choosing work in a particular profession or participating in charitable causes.

On the other hand, the trust can be written to reduce or refuse payment if a beneficiary does not get a job or relapses into an addiction. However, a person creating a trust should be reasonable in what he or she expects. Asking someone to change religions or get a divorce may not hold up if an heir challenges it in court.

An estate planning attorney can help one construct an incentive trust so that it will stand up under many circumstances. A lawyer can also give advice about choosing a trustee and allowing the trustee to make common sense decisions in the event of unplanned contingencies. Creating an incentive trust may be one way to bring a person in Oklahoma peace of mind if he or she has reservations about the ability of heirs to deal successfully with a windfall.

Source:, "Savvy Senior: Incentive trusts can motivate your heirs", Jim Miller, Nov. 22, 2016

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