Incentive Trusts

Professor Joshua Tate of Southern Methodist University has published an interesting and informative article on Incentive Trusts, which are generally used by parents to try to shape the behavior of their children.  The abstract is as follows:

This Article examines the contemporary phenomenon of incentive trusts: trusts that use money to encourage or discourage certain behaviors. Using evidence from Internet websites, practitioner articles, and newspaper articles, the Article considers the likely provisions that a typical incentive trust might have, and explains how such trusts might lead to a problem of inflexibility when they are not drafted so as to take into account the possibility of changed circumstances. The Article also examines current law regarding trust modification and termination as well as recent reform proposals, and suggests some alternatives that might better take into account the particular characteristics of incentive trusts.

The citation is: Tate, Joshua C., “Conditional Love: Incentive Trusts and the Inflexibility Problem” . Real Property, Probate and Trust Journal, Vol. 41, pp. 445-496, 2006 Available at SSRN: http://ssrn.com/abstract=873625