Incentive Trusts: Balancing Rewards and Expectations

Incentive trusts are a mechanism by which the settlor tries to “incentivize” or seek to control the behavior of beneficiaries.  Settlors may want to encourage children or grandchildren to achieve certain educational milestones, maintain a job, get married or have children, or remain free of substance abuse or other risky behaviors. But there are serious limits – limits of what the law will allow a settlor to demand of a beneficiary or a trustee to enforce.  There are also practical limits, including how to objectively judge a beneficiary’s behavior when making distributions.  Incentive trusts are decidedly a mixed bag. This program will provide you with a real-world guide to drafting incentive trusts, counseling clients about their effectiveness and limits, and understanding what the law will (or won’t) allow.

Schedule:

     •    Uses and limitations – practical and legal – of incentive trusts
     •    Types of incentive trusts – and rates of success or failure in achieving settlor goals
     •    Structuring incentives so they can be objectively measured and administered by trustees
     •    Drafting distribution provisions
     •    Counseling clients about downsides of incentive trusts and alternatives