Incentive Trusts: Carrots and Sticks to Encourage Good Behavior & Discourage Bad
One of the biggest challenges of transferring wealth to a younger generation is not financial or tax-related – it’s how to transfer the wealth without diminishing or eliminating the incentives to a beneficiary’s good behavior or even encouraging self-destructive behavior. “Incentive trusts” are the solution used by many benefactors to encourage education, public service, thrift or a stable family life, and to discourage bad behavior like substance abuse.
But the challenges of incentive trusts are manifold: How do you define objectively measurable standards for beneficiaries? When do the benefactor’s goals for the beneficiary go too far and become unenforceable? How do you actually draft provisions to control a beneficiary’s personal life? These and many other questions will be addressed in practical guide to incentive trusts.
- Practical challenges of creating an incentive trust
- Defining objectively measurable standards for beneficiaries and trustees
- Understanding when a benefactor’s goals go too far and are unenforceable
- Essential communication with beneficiaries to ensure the trust’s success
- Drafting tips and traps for incentive trusts
Speaker:
John A. Warnick is an attorney and wealth counselor in Denver, Colorado, with a national estate and trust planning practice. He is widely recognized for his counseling of high net worth families on purposeful giving, the process of not only transferring wealth but creating a lasting legacy. He is also the managing collaborator of the Purposeful Planning Institute and a wealth consultant with Family Wealth and Transition Solutions. Mr. Warnick is a Fellow of the American College of Trust and Estate Counsel and formerly practiced law with Holme, Roberts & Owen, LLP in Denver. He received his B.A. from Brigham Young University and his J.D. from The George Washington University Law School
