Keep it. Simple.
Get My Newsletter
You’ll want to read this. Trust me.
You’ll want to read this. Trust me.
This site uses cookies. By continuing to browse the site, you are agreeing to our use of cookies.
OKLearn more×We may request cookies to be set on your device. We use cookies to let us know when you visit our websites, how you interact with us, to enrich your user experience, and to customize your relationship with our website.
Click on the different category headings to find out more. You can also change some of your preferences. Note that blocking some types of cookies may impact your experience on our websites and the services we are able to offer.
These cookies are strictly necessary to provide you with services available through our website and to use some of its features.
Because these cookies are strictly necessary to deliver the website, refusing them will have impact how our site functions. You always can block or delete cookies by changing your browser settings and force blocking all cookies on this website. But this will always prompt you to accept/refuse cookies when revisiting our site.
We fully respect if you want to refuse cookies but to avoid asking you again and again kindly allow us to store a cookie for that. You are free to opt out any time or opt in for other cookies to get a better experience. If you refuse cookies we will remove all set cookies in our domain.
We provide you with a list of stored cookies on your computer in our domain so you can check what we stored. Due to security reasons we are not able to show or modify cookies from other domains. You can check these in your browser security settings.
These cookies collect information that is used either in aggregate form to help us understand how our website is being used or how effective our marketing campaigns are, or to help us customize our website and application for you in order to enhance your experience.
If you do not want that we track your visit to our site you can disable tracking in your browser here:
We also use different external services like Google Webfonts, Google Maps, and external Video providers. Since these providers may collect personal data like your IP address we allow you to block them here. Please be aware that this might heavily reduce the functionality and appearance of our site. Changes will take effect once you reload the page.
Google Webfont Settings:
Google Map Settings:
Google reCaptcha Settings:
Vimeo and Youtube video embeds:
The following cookies are also needed - You can choose if you want to allow them:
You can read about our cookies and privacy settings in detail on our Privacy Policy Page.
Legal DisclosuresSign up for our newsletter.
How?
When the trustee likes what a beneficiary is doing, they’ll give bigger distributions. They’ll reduce or hold back distributions when they don’t like what they see.
Bribery is the word that comes to my mind. One colleague goes so far as to call it extortion.
Here are some classic incentive trust provisions:
“The trustee will pay you 50 cents for every dollar you earn.” (So what if you’re a teacher doing good work but not making much money? So what if you’ve decided to leave the workplace and serve as a caregiver for an ailing family member?)
“When you get your bachelor’s degree, the trustee will pay you $25,000.” (So what if you’re a talented chef and chose to pursue that instead?)
“Every time you have a child, the trustee will pay you $25,000.” (So what if your brother and his wife can’t have kids? They get the short end of the stick here.)
These incentives can discourage a beneficiary’s personal interests by setting the example that life is only measured by having or getting more money.
The chef might take a more traditional path even though they’re good enough for a spotlight on Chef’s Table.
The teacher may feel judged by provisions that ignore work that society needs but undervalues.
The excellent student might decide that their natural curiosity has been hijacked and turned into a job. Their curiosity takes the hit.
Stanford psychology professors have spent three decades studying how externally imposed rewards can wreck an internal interest that already values the subject of the reward.
A school of wealth psychologists worries that intellectual and emotional pleasure diminishes when you find yourself on a treadmill someone else put you on – even if the treadmill encourages you do keep doing something you like.
I’m not saying incentive trusts are bad.
I’m not saying they don’t work.
They need to be implemented thoughtfully so they don’t backfire.
How about structuring an incentive trust that rewards contributions to art, science, culture, and education? It can be done – especially if you help a client figure out what things they value most in the world.
I’m pretty sure the answer will (almost) never be “I want my kids to measure their lives using money.”