One of the most important things you can do while setting up a trust as part of your estate plan is to ask “what if” questions about the future. These questions can help you plan accurately for your children.
For instance, you may be considering an incentive trust on the grounds that you want your children to keep working. You know that you can leave them enough money that they could quit their jobs. An incentive trust can incentivize them to work by stating that they have to be employed to get a yearly payout from the trust, rather than just leaving them the money.
This all sounds good, but what if the country goes into an economic depression? This is not your children’s fault, but they could get fired. Since they’re unemployed, they won’t qualify for the payout. This leaves them with nothing. Wouldn’t you rather set the trust up to help them out at a time like this, when they need it most?
Or, what if the child decides to return to school to pursue an advanced degree, even in their 50s? You know that education has value, but it could take years to get that degree. Should they really get cut off from those payments since they’re going to school and not working? By the letter of the law, they would be, at least if the trust says they must be employed to get the money.
You can probably think of many more similar questions, but all of them just point out one thing: When doing estate planning, you really need to consider your options to create a plan that works the way you want it to.