Why Not To Use Incentive Clauses in Trusts

By Steven J. Oshins, Esq., AEP (Distinguished) Many attorneys draft incentive clauses into trusts. An incentive clause generally makes additional distributions to the beneficiary upon reaching certain milestones. Probably the most popular incentive clause is one which makes mandatory distributions based on matching the beneficiary’s salary. That sounds great until you actually think through a real-life example and the disastrous results. A REAL-LIFE EXAMPLE Assume that Client has three young children. Child A grows up to be a top surgeon earning $3 million per year. Child B becomes a stay-at-home parent to three wonderful children and is one of the…