What Does Estate Planning Mean for Women? Part 2

This is Part 2 of a 3 part series that focuses on Women and Estate Planning as we celebrate Mother’s Day 2014. Part 2 sheds some light on Incentive Trusts that address concerns about children and grandchildren.

Let’s start by first asking the question, what is a trust?

Trusts come in many forms and have many goals, some include: revocable, marital, irrevocable, life insurance, incentive, special needs and others that are too numerous to name for this post. The discussion about the various types of trusts will continue at a later date.

A trust can be used in estate planning to provide longterm management of assets. Trusts differ from wills in many ways. Most significantly would be the ability to draft provisions that address how assets are to be distributed to heirs over a long period of time.

This feature can be helpful to families when dealing with children with various degrees of accomplishments. For example, one son has worked for ten years with the same company and is on a career path to make great contributions to his industry. On the other hand, your youngest daughter has been floundering around aimlessly for years and struggles with addiction or bad habits that create chaos in her life.

What options are available to you to address the differences in your children? An incentive trust can provide you with the ability to have a trustee distribute assets to heirs based on certain barometers. If you wish to have your children attend college or a trade school in order to receive an inheritance or you are fine with funds being distributed to an heir who wants to start a business or buy a house, then an incentive trust can help.

A major element of an incentive trust is selecting the right trustee, whether that person is a family member, trusted friend or professional. Much time and consideration should be put into who you will chose to handle the management of the trust. Some banks have trust departments but many institutions require a minimum amount of assets in the trust before they will agree to be a trustee.

Think about what your wishes and desires are for your children and grandchildren.

Part 3 of this series about women and estate planning is coming soon.