There are many different types of trusts you can use, depending on what you’re trying to accomplish. A special needs trust, for instance, can help a beneficiary qualify for benefits while still receiving an inheritance. A spendthrift trust can protect assets if you think a beneficiary is going to spend them frivolously and quickly.
Another option is an incentive trust. There are many ways you can use this to create goals for your beneficiaries and help guide their lives in positive directions.
Supporting a non-lucrative career
One example is if you have a beneficiary who has a career that they enjoy or are passionate about, but it simply isn’t that lucrative from a financial standpoint. Perhaps they are a musician or an artist. You don’t want them to give up on their dream, so you’re not interested in just leaving them a large inheritance all at once. But you could use an incentive trust to say that they can take annual withdrawals from the trust as long as they stay involved in creating art. This way, they can focus on their passion without worrying about the financial details.
Setting up a goal
Another alternative is to create a very specific goal that they need to accomplish to gain access to the funds. Education is a common example. If you’re giving a young beneficiary an inheritance, you may say that they only get to access their funds after they graduate from college or secure a degree.
If you’re interested in using trusts as part of your estate plan, take the time to carefully look into all of the legal options at your disposal.
