There is a somewhat sterile financial component to estate planning, and this is necessary so that you get the most out of your resources and provide for a smooth and efficient transfer of assets to your loved ones after your death. But when you seriously and comprehensively contemplate the impact of your legacy you will invariably find yourself considering the way that your loved ones may handle a large influx of money.
It is likely that most of the people on your inheritance list would be fully capable of managing these resources. But you may have concerns about some of your family members.
One way that you can guide an heir toward productive behavior or away from self-destructive actions is to make this individual the beneficiary of an incentive trust. You must appoint a trustee to manage the resources, and many people will select a professional trustee such as a bank or trust company. The trustee distributes funds to the beneficiary according to the instructions you place in your trust agreement.
Depending on the age and proclivities of the beneficiary these stipulations could take any number of forms. For example, if you had a heir with substance abuse problems you could require that this individual complete a rehabilitation program and submit to regular testing before distributions are made.
To encourage someone without any particular challenges toward the fulfillment of his or her full potential you could have the trust match the earnings of the beneficiary dollar for dollar to instill a work ethic in this family member.
The possibilities are limited only by your own imagination and best judgment. If you are interested in including an incentive trust in your estate plan, the best way to proceed is to arrange for a consultation with an experienced estate planning attorney.