Kathryn T. Joseph & Associates, Inc.

The benefits of an incentive trust

Ohio parents who are worried that their heirs may not be great at managing money or other assets may want to consider an incentive trust. When they die, assets go into the trust as opposed to going directly to an heir. A trustee oversees the trust and distributes assets when heirs meet conditions spelled out in the document.

Conditions may include going to college, having children or getting married. It may also reward an individual for doing charitable work or picking a career that may benefit society even if it doesn't pay much. It may also help a child or another heir pay for rehab to recover from an addiction. Conversely, it could reduce or delay the distribution of assets to those who choose not to work or otherwise not meet the terms laid out in the incentive trust.

It is important that the incentive trust be constructed in a manner that doesn't unintentionally punish an heir. For instance, those who can't work because of an injury or illness may not receive a distribution if the trust stipulates that an heir find a job. It is also important to recognize that trusts that encourage decisions such as leaving a church or leaving a spouse could be declared invalid in court. Accordingly, it is wise to allow the trustee to have some discretion and flexibility.

Individuals who are interested in trust planning may wish to meet with an attorney to discuss their objectives. An attorney can recommend certain tools based upon family and financial circumstances. If it determined that a trust might be advantageous, it is important to have confidence in the trustee.

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Kathryn T. Joseph & Associates, Inc.
Executive Commons West
29425 Chagrin Blvd.
Suite 305
Cleveland, OH 44122

Toll Free: 888-335-6650
Phone: 216-245-0504
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