I've been following an interesting string of comments on "incentive trusts." These are trusts that tie distribution of the trust corpus (money) to the beneficiaries to the beneficiaries' achieving some benchmark, such as graduating from college, kicking a habit or otherwise conforming to some standard the donor wants. The discussion has centered around whether attorneys should get involved in these trusts. The biggest objection, from a drafting standpoint, is that such trusts have a great potential for litigation, especially where the standard to be achieved is somewhat nebulous. For example, what does it mean to kick a habit? Graduating from college is more concrete but even then there is wiggle room. A particular college? A particular major? A minimum GPA?
Perhaps the best comment was by someone who said, ask the client, "If your child won't do this for YOU, what makes you think she'll do it for your MONEY?" To that I would add, if your relationship with your child is so shallow that she will do it for your money but not for you, why would you want to leave her anything with strings attached in any case?
