What is an incentive Place definition
What is a trust
What is an incentive trust
Background / history of incentivesIn introduction cover the basics
What are incentive trusts
Why are they used
How long has the concept being around
What are its advantagesThe concept of incentive trusts has been around for about xxx years
These Trusts were developed to deal with the growing number of wealthy and very wealthy people who were concerned whether the beneficiary would be able to handle the inheritance
Usually in the past where there was concern about whether the beneficiary would be able to handle and cope with the inheritance , the estate was mainly placed in trusts with suitable trustees appointed
Explain its American origins and briefly the main incentives considered there and explain that these are limited and there is scope for considerable expansion
Make list of main 20 points or more that must get across i.e. like how people generally make wills nowadays and the rich are increasingly doing thisEstate Planning or Succession Planning decide which of these os a better term to use probably succession planning is more meaningful
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In essence , you will be asking your beneficiaries to carry out some task or occupation, after your death, which you believe would improve and enhance their life. In order to ensure that they carry out your wishes you are providing them with an inducement, namely the awarding of a sum of money from your estate upon accomplishment of the task.
The rationale is that rather than just leave money to your beneficiaries and let them spend it as they wish, inducing them to engage in tasks considered to be improving, will enhance their lives and hopefully improve their prospects.
The reward for the task may be a small sum or a large fortune depending on circumstances.
Amount for Incentives
Place this later. Once revision done re organise contents
The amount you set aside for incentives will depend upon the size of your estate, the needs of your beneficiaries and many other factors. If your beneficiaries are quite young, then you will need to take greater care with the choice of trustees and perhaps have stronger Foundational Incentives to ensure that your child will develop a character that your wealth is less likely to spoil.
Perhaps setting aside twenty percent of an estate worth a Twenty million pounds would be a starting point. Of course the proportions could be different depending on several factors, such as the size of the estate and the purpose intended for incentives. The money can be spread across a range of Incentives.
If your beneficiaries fail to carry out the task or tasks then the set amount could go to a suitable charity or other good cause. Hence the beneficiaries then have a a choice, as to whether or not they wish to perform the nominated task or tasks.
And if thought through and applied well, the 200000 will help the beneficiaries to make better use of the rest of the inheritance.
The amount to set aside for incentives will vary from estate to estate and from family to family. Once careful thought is applied as to the range of incentives, and their rationale and purpose it would be easier to decide how to allow for incentives, if at all
The amount to set aside for incentives will vary from estate to estate and from family to family. Once careful thought is applied as to the range of incentives, and their rationale and purpose it would be easier to decide how to allow for incentives, if at all.
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Beneficiaries
Beneficiaries will naturally be of differing characters and persuasions, some better formed and informed than others. They come in many shapes and sizes and can range from the very spoilt to the fairly sensible. The process of shaping and fashioning their characters does not stop at the end of their formal education but continues thereafter and there is no reason why that should not continue after your death
If you are leaving substantial wealth it is all the more incumbent upon you to make sure
that those who have the benefit and stewardship of that wealth should have the necessary educational, financial and other skills to make sure that the best part of your wealth is used for the best of purposes.
Your professional advisers should be made aware of more than just the beneficiaries names and ages. They should grow to know each other well. This hopefully enriching relationship, will allow them to better advise on suitable Incentives and possibly much more. The Family Ethos
The values and heritage of a family are an important element of the ethos of a family
These are subjective considerations for every family or its grouping, though there will be common threads.
It is important that the family ethos is well considered and developed by you as part of the estate planning process.Define what is meant by family ethos, it will be a number of things, occupation, culture , background, size heritage and so on
The value of a family is not just in its financial wealth but also its human and intellectual capital. Including also the skills and accomplishments that a family has and how well the members of the family connect and bond with each other, together with the social compact between the generations. All these and other pertinent factors matter greatly when considering how best to decide on incentives
The person developing the estate plan should bear the overall wealth and attributes of the
family in mind, so that a will is created which fashions and preserves the family ethos for the good of all.
Family here refers not just to fathers, mothers, children and grandchildren, but may extend to uncles, aunts, nieces, nephews, cousins etc depending on the family and what bonds exist. The idea is that if bonds exist Incentives may strengthen such bonds. And if bonds do not exist then some may be created.
For example a good incentive could be for a member of the family to propagate the family ethos and its bonding by arranging regular gatherings and also creating an online presence where interaction may take place.
Relationships
Those making wills will have different relationships to consider. That of being a parent, grandparent, an uncle, a cousin , a friend etc. Reword as repeat from earlierThere are many couples and people who do not have children and Incentives are a good way of including nieces, nephews, cousins and others within the ambit of your estate planning and to create suitable Incentives for their benefit.
There is no reason why you cannot benefit close friends and their children and others near and dear, they might welcome the benefit of your good sense and your reward.
Consultation
As part of this process you may wish to consult the intended trustees to ascertain their views on Incentives. Where suitable you may also discuss aspects of your potential plans with your beneficiaries and take their views into account where sensible and not too distressing.
Much depends on the involvement you may wish the beneficiaries to have in this process and what value may be derived from that involvement. At times families may wish to discuss Incentives with other family members to obtain a better idea of the range of Inducements that could be offered, jointly and individually.
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In the case of most wills, the basics are fairly simple as to who the money will be left to and the only important matters which arise are the ages at which the beneficiaries would inherit absolutely and whether there is suitable provision for them to be looked after till that age. And of course how best tax may be saved, which usually takes up most of the time and effort PUT THIS ELSEWHERENeed to mind map the text so that it flows in better order
Start by explaining the concepts of how people usually leave money and then go into more detail
Process
By considering the use of incentives as a part of your estate planning, the process of making your will takes on a unique aspect. It gives you an opportunity to consider and reflect how you view the use of your wealth after death It gives a chance to consider your personal and family ethos, financial and otherwise. Such reflection serves you well in fashioning and creating suitable Incentives.
Considering Incentives also makes the process of making your will more interesting. You will get a chance to ponder over your family ethos, and your values and desires. Such considerations help to fashion inducements to shape your future generations, in many ways, some perhaps of major significance.
The process of considering incentives may also help you whilst you are alive for if the beneficiaries know that you are setting out incentives for them in your will, they may please you by carrying out the task while you are alive.
Wishful thinking, perhaps, and nothing wrong with that.Either way, good thoughts applied practically never go to waste and sensible innovation by way of incentives will lead to an evolution in estate planning in Estate Planning
Professional Advisers
Your professional advisers should be made aware of more than just the beneficiaries names and ages. They should grow to know each other well.
This hopefully enriching relationship, will allow them to better advise on suitable Incentives and possibly much more.
Write more on interaction between professional advisers and potential and actual beneficiaries. Consider a flow chart
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Effectiveness In order for the incentives to be effective, they have to be well implementedIn terms of the Foundational Incentives, suitable trustees would have to be appointed to oversee proper implementation. Much will depend on the nature of the Incentive, the beneficiaries and the availability of suitable Trustees
With regard to Important Incentives and Simple Incentives, the implementation can be made a little more flexible, for example the beneficiary could, if old enough, be trusted to oversee himself.
Do more words in bold for contrast
There are no easy answers to the issue of rigid implementation and there are various aspects which may be difficult, such as having satisfactory evidence that implementation has indeed taken place and to the degree stated. In the event that the beneficiary chooses not to carry out the Incentive then the set amount would be given elsewhereWe cover in more detail aspects of how incentives may be best implemented in our book on Estate Planning and Incentives
Drafting
Incentives in the way that they have developed in modern times are an innovation and particular care needs to be taken with regard to the drafting of the Incentives.
It is important that advice is taken from those who are familiar in this type of estate planning and who have available a range of suitably drafted precedents for incentives
There is also the question to consider as to how often the will is going to be reviewed, as certain incentives may be more suitable for beneficiaries at certain ages and you never know when the final day will come.
Careful thought has to be applied to ensure that the incentives stated are viable at the age that the beneficiary has to carry them out. The Incentives will have to be carefully crafted to ensure that there is no ambiguity or misunderstanding.
Letter of Wishes
If you do not wish to have incentives included in your will, then there are other ways of incentivising your beneficiaries. Guidance can also be included in a Letter of Wishes , with the will. Whilst such letters are not binding they will give a good idea of what your thoughts are.
Discussion
You can just sit down with your beneficiaries and discuss your wishes, however since this involves you and them in the contemplation of your demise, these are not welcome or easy discussions. Conversations are also likely to be forgotten and you cannot be sure what effect the talk has had. Generally it would be better to consult a wise professional and see what may best be done
and set relevant matters in writing for later review and inclusion in a letter of wishes
You can also make a dvd or audio of the guidance you wish your beneficiaries to have.
Lifetime
REDRAFT BELOW
There are of course various ways in which a Testator might consider Incentives as a part of the estate planning process. The good thinking behind incentives does not mean that Incentives have to be included in the will
The process of thinking about incentives and why you may want to include them is a valuable
and worthwhile reflection on your family and its ethos
Such reflection may mean that you could provide guidance as to your wishes to the beneficiaries, whilst you are alive . For example if you believe that learning the family language is important you may want to bribe, sorry incentivise, them to do so whilst you are alive and so on.
Legal Analysis
Write up legal analysis and have in smaller font
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The purpose of the Incentives we suggest and set out in this work are various and varied. Some Incentives are intended to shape your beneficiaries to make them productive, worthwhile individuals. The purpose of others is to extend familial bonds for the future. Some Incentives seek to make your beneficiaries more creative and interesting persons. Some of them may well have elements that have appealed to you and which you think may appeal to them. Whichever and whatever, they are mostly designed to encourage and inspire your beneficiaries in some way.
The purpose of the Incentives we suggest and set out in this work are various and varied. Some Incentives are intended to shape your beneficiaries to make them productive, worthwhile individuals. The purpose of others is to extend familial bonds for the future. Some Incentives seek to make your beneficiaries more creative and interesting persons. Some of them may well have elements that have appealed to you and which you think may appeal to them. Whichever and whatever, they are mostly designed to encourage and inspire your beneficiaries in some way.
Incentives can be divided into several categories. Our approach for this work is to divide them into
Foundational, Important, Simple and Fun
Foundational IncentivesIncentives which are serious and foundational. This will be where there is great concern that substantial wealth may prove a detriment if not suitably controlled. The potential beneficiaries may already have exhibited adverse characters and the concern is that they will misspend and harm themselves. In this instance the Incentives need to be very carefully chosen and then set up to ensure that there is control by Trustees and safeguards built in.
For example a beneficiary may have to be in work or obtain a university degree, before any allowance if
given.
Important Incentives
There may be incentives which are important but are not crucial for the beneficiary to survive and prosper. They have a serious purpose in that their effect should be far reaching for example such as your wishing them to learn their family language as that will connect them better with members of the family and community.Between the other incentives, the Important incentives may prove to be the ones of the most lasting benefit if carefully chosen and well implemented. Some of these may prove to be foundational
Simple Incentives
These may embrace smaller sums of money being given for matters such as reading a
book from a chosen list, going on short courses and the like
Fun Incentives
Incentives to ensure that your beneficiaries have fun and joy and comprise of fun things that you think they enjoy or are things that you know they already like and find pleasantSet out some examples for the above and also refer to the longer list
Considerations
For Incentives some areas for consideration are education, occupation, marriage, faith and culture. You may also wish to ensure that your beneficiaries have a reasonable set of common life skills so that they turn out to be well rounded individuals whilst retaining their individuality
Much depends on the family, the size and extent of the wealth and on your values and wisdom. The process of considering incentives as part of your estate planning will lead to much more than just your will at the end. It will provide a valuable chance for reflection and consideration of many important areas of your life.
Incentives can be a mixture of entertainment, encouragement, education and so on. There is an ample list of incentives covered in our book on this subject and a small selection is set out on this site. Please see the menu above
All heiresses are beautiful”
John Dryden
Clarify or explain that the term Incentive Trusts and why we prefer to use the general term IncentivesState that cannot say too much about each of the Incentives here except to give some flavour. We expand upon each of the incentives in the book and hope explore these further in the light of reviews and suggestions
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1 .EDUCATION
Education is the most powerful weapon which you can use to change the world. Nelson Mandela
Attend at University and obtain a degree in a chosen subject.
A Further reward if secure a
post graduate qualification. All costs paid. and on completion a reward of a set sum of money
2. INCOME
Wealth is the product of mans capacity to think. Ayn Rand
The estate to match the annual income earned by the beneficiary. If the Beneficiary earns £100000 per annum the Estate to match that, in whole or multiples
3. CHARITY
We only have what we give. Isabel AllendeTo encourage philanthropy the estate could match charitable donations made by the beneficiary
4. LANGUAGES
If you talk to a man in a language he understands that goes to his head. If you talk to him in his own language it goes to his heart.A profound difference can be made if your beneficiaries learn to read and write the language of their origins. There will be better communication with family and will bring the beneficiaries closer to their roots.
5. CONVICTIONS
This is where any allowance is conditional upon the beneficiary having a clean criminal record.
A check to be carried out every year, will identify causes for concern
6. DRUGS
“Drugs are a waste of time. They destroy your memory and your self-respect and everything that goes along with your self esteem.” Kurt Cobain
If there is concern that the beneficiary is addicted then any allowance paid may be made subject to the beneficiary passing a drugs test. This will also provide a chance to help the beneficiary deal with addiction
IMPORTANT
7. BUSINESS
Being good in business is the most fascinating kind of art. Making money is art and working is art and good business is the best artAppoint suitable people to encourage your beneficiary to start a business.
Only if your beneficiary is keen of course. Your beneficiary will learn and grow and maybe build something of value
Make sure that expand on each incentive in the Book
8. TEACHING
I think the teaching profession contributes more to the future of our society than any other single profession. John WoodenA teaching qualification would be of invaluable benefit.Inspire your beneficiary to become a teacher for a few years , with a period in other nominated countries. Teaching is a worthwhile profession and not well paid generally.
9. PROPERTY
A people without the knowledge of their past history, origin and culture is like a tree without roots. Marcus Garvey
Buy a nice place where your roots are and pay your beneficiaries to stay and visit for a set period every year or two. If they don’t then the reward forfeited to some other lesser cause
10. LEGAL SKILLS
“Are you planning to follow a career in Magical Law, Miss Granger?” asked Scrimgeour.
“No, I’m not,” retorted Hermione. “I’m hoping to do some good in the world!” J.K. Rowling, Harry Potter and the Deathly Hallows
Your beneficiary will need to deal with lawyers regarding probate.
Pay your beneficiary to attend courses and lectures on estate planning and management. This will enable them to be a useful part of the process
11. OLDER PEOPLE
When old people speak it is not because of the sweetness of words in our mouths; it is because we see something which you do not see. Chinua Achebe
Working with and helping the elderly is rewarding.
Your beneficiary will also learn much from the wisdom of the older and wiser.
This can be truly enriching, and an incentive will make all the difference
12. CHARITY
If you haven't got any charity in your heart, you have the worst kind of heart trouble
Bob Hope
Incentivise your beneficiary to work with one of several nominated charities.This will help them to become more caring people.
Such experience will help if you are also making sizeable donations to charity
13. DANCE
Everything in the Universe has a Rhythm
Everything Dances .
Maya Angelou
Dancing will refresh parts of the body that the other senses do not embrace.
Folk Dance, Hip Hop, Latin, Ballroom and Garba and Raas .
There are many to choose from. And if they don’t want to dance then encourage them to appreciate dance performances
14. MUSIC
Ah Music! A Magic far beyond all we do here J K Rowling Harry Potter and the Sorcerer's Stone
Get them to learn a musical instrument. Many benefits, they could form a band .
Pay them to make a music video.There are many possibilities with music
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15. BOOKS
“I declare after all there is no enjoyment like reading!
How much sooner one tires of any thing than of a book! -- When I have a house of my own, I shall be miserable if I have not an excellent library.”
Jane Austen, Pride and Prejudice
The most invaluable insights and guidance can come from reading a selection of books. Some will be foundational.
Many of your choice and many your beneficiary may find interesting.Say £150 per book depending on the character of your beneficiary.
We cover in detail the rationale and purpose
of each of these selected Incentives, and many more, in our full book on Incentives and Estate Planning
16. ELOCUTION
Talking and eloquence are not the same: to speak, and to speak well, are two things.
Ben Jonson
Communication is important and a good start is for your beneficiary to acquire good elocution and presentation skills.The benefits are numerous and encouragement will help this to be done.
17. WEB SKILLS
Young players need freedom of expression to develop as creative players... they should be encouraged to try skills without fear of failure. Arsene WengerMotivate your beneficiary to acquire suitable web skills and to create and publish web sites and much moreThese are the new skills of the age and well worth learning
18. YOGA
Oh gosh, I noticed dramatic changes in my body after I started doing yoga, but I also think you have to shake things up.
Jennifer Aniston
The ancient art and craft of Yoga is steeped in much learning and wisdom.
Your beneficiary will stay or become healthy and will be better able to stay calm and deal with the stresses and strains of life
19. MEDITATION
At the end of the day, I can end up just totally wacky, because I've made mountains out of molehills. With meditation, I can keep them as molehills. Ringo Starr
Following on from yoga, your beneficiaries would enjoy attending the many meditation resorts around the world.Treat them
20. DIARY
I never travel without my diary. One should always have something sensational to read in the train.
Oscar Wilde
Encourage them to keep a regular diary. A handwritten one as well, though you may need to pay more.It will give them a chance to reflect on the day and in ages to come.
21. GATHERINGS
A happy family is but an earlier heaven. George Bernard Shaw
Incentivise them to organise frequent gathering of close family and friends. Dinners , picnics and much else.
22. FAITH
“The function of prayer is not to influence God, but rather to change the nature of the one who prays.”
Certainly incentivise your beneficiary to learn all about the family faith and to know it well. Also ask them to learn well about those of other faiths and those of no faith. An important area in our age and a good understanding and appreciation will make your beneficiary grateful and graceful.
23. PARTY
“I drink to the general joy o’ the whole table." Macbeth” William Shakespeare, Macbeth
Have them organise a party every year in celebration of your passing and they can mourn and dance and dally.All on you of course!
24. HOLIDAYS
A vacation is like love - anticipated with pleasure, experienced with discomfort, and remembered with nostalgia.
Author Unknown
Provide Incentives for them to have holidays at some places of your choosing and some places they choose themselves
25. COOKING
Cooking is about passion, so it may look slightly temperamental in a way that is too assertive to the naked eye.
Gordon Ramsay
Pay your beneficiary to learn cooking. Cooking lessons and trips and so many possibilities. They will never go hungry. Cooking is about passion, so it may look slightly temperamental in a way that is too assertive to the naked eye.
26. VISITS
Friends are those rare people who ask how we are and then wait to hear the answer.
Henri Nouwen
Visit relatives and friends frequently and take along suitable gifts. Yes they are being paid to do this and may be mocked.Bribe , Carrot , Stick
Whatever does the Trick,
27. FAMILY WEB
Look well after a beneficiary who organises an online web presence for the family and extended family.
This helps them all to stay in touch with each other. Your support will provide encouragement to do this task well and regularly
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