An estate plan can do far more than just protect your heirs from creditors and divorcing spouses. When an estate plan is drafted correctly, you can also use it as a way to help encourage and guide your loved ones, even after you are no longer there.
Ensuring that your children do the right thing and strive to be everything that they can be is important, and by providing some incentives in your estate plan, you can help motivate them to do these things. For example, you may want all of your children to graduate from college, if you include an incentive for this in your plan, they will probably be more likely to attend college and graduate.
One of the easiest ways to do this is to leave your childrens inheritance to them through a trust. The trust can have instructions on when to distribute money to your heirs, as well as under what circumstances. If you would like your heirs to strive for a better future, you can leave instructions that some of the trust money can be used for a startup business, but require that the child provide the trustee with a business plan. You can include instructions that more money can be distributed after the business has earned a certain amount of time.
You can structure your trust in a way that would provide the same for your children as you would if you were still alive. Though a lot of people believe that an estate plan that is structured in this way is too controlling, you should remember that this is your money that you are giving your heirs. If you were still there, is it more likely that you would give them money to go spend the summer on the beach in Hawaii, or to pay so that they could go to school and get a degree?
There is no doubt that an incentive trust is more controlling that just handing over a childs entire inheritance once they are of age, but it is likely to give your child more ambition and a better life if you do put some restrictions on the use of their inheritance.
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