Incentive Trusts: The Promise & Limits of "Do What I Want & I'll Reward You" - 2019

Originally presented on August 13, 2019

Incentive trusts are a mechanism by which the settlor tries to “incentivize” or seek to control the behavior of beneficiaries.  Settlors may want to encourage children or grandchildren to achieve certain educational milestones, maintain a job, get married or have children, or remain free of substance abuse or other risky behaviors. But there are serious limits – limits of what the law will allow a settlor to demand of a beneficiary or a trustee to enforce.  There are also practical limits, including how to objectively judge a beneficiary’s behavior when making distributions.  Incentive trusts are decidedly a mixed bag. This program will provide you with a real-world guide to drafting incentive trusts, counseling clients about their effectiveness and limits, and understanding what the law will (or won’t) allow.

• Uses and limitations – practical and legal – of incentive trusts 
• Types of incentive trusts – and rates of success or failure in achieving settlor goals
• Structuring incentives so they can be objectively measured and administered by trustees
• Drafting distribution provisions 
• Counseling clients about downsides of incentive trusts and alternatives

Speaker: John A. Warnick, attorney and wealth counselor, Denver, CO

NOTE: This program was originally produced as a telephone seminar and is available on demand in streaming audio. This material qualifies for self-study credit only. Pursuant to Regulation 15.04.5, a lawyer may receive up to six hours of self-study credit in a reporting year. Self-study programs do not qualify for ethics or elimination of bias credit.