When North Carolina parents or grandparents begin planning their estates, one concern may be that one or more of their heirs will not make the best use of their inheritance. In fact, some may worry that providing someone with a history of personal irresponsibility with a great deal of money will only create more problems for that person. In such situations, trusts are often a useful tool in encouraging responsible behavior.
Trusts allow people to secure their assets so that they are distributed according to their wishes. Assets in a trust are administered and disbursed by a trustee. It is possible for people who set up trusts to be very specific in their instructions regarding the distribution of funds.
For example, in an incentive trust, a parent may only permit their children to receive money if they meet certain conditions. These conditions may include completing college, holding down a job, or getting treatment for a substance abuse problem.
It should be noted, however, that setting up trusts like these can be very complex. In some cases, factors beyond a beneficiary’s control can make it impossible to meet the standards set by the trust. As a result, they may not receive money that they desperately need. When this happens, the spirit of the trust, which was to ensure the best interest of the beneficiary, is compromised.
One way to circumvent this type of problem is to insert language into the trust document that gives the trustee some degree of flexibility and discretion. An estate planning attorney can be helpful in preparing such a document and ensuring that it is in line with the client’s goals.