Definition of Incentive trust:
An incentive trust is a legally-binding fiduciary relationship in which the trustee holds and manages the assets contributed to the trust by the grantor. In an incentive trust arrangement, the trustee must adhere to specific requirements set out by the grantor regarding what conditions the trust's beneficiaries must meet in order to receive funds from the trust.
An incentive trust is an inheritance that details specific conditions that must be met by the beneficiaries named in the trust. For example, an investor may wish to leave a certain portion of their estate to a grandchild, but they also don't want the inheritance to reduce the grandchild's drive to pursue a professional career or higher education. By leaving the inheritance funds to the grandchild in an incentive trust, the grantor can specify that the funds are to be dispersed only once the grandchild has obtained an undergraduate degree, for example, or any other legally permissible requirements the grantor may wish to specify.
A fiduciary relationship that is legally binding where a trustee will hold and manage assets that are contributed to a trust by a grantor. Incentive trusts can be considered to be conditional inheritance for heirs or other beneficiaries that are named in the trust as there are specific conditions that these beneficiaries must meet prior to receiving funds from the trust.
How to use Incentive trust in a sentence?
- Incentive trusts are conditional trusts created to induce positive or specific behavior in beneficiaries by specifying criteria that must be met for disbursement of funds.
- The role of trustees is extremely important in such estates because the beneficiary is entitled to funds only at their judgemental discretion.
- They are common among wealthy families for parents to ensure that their children do not forget the value of hard work.
Meaning of Incentive trust & Incentive trust Definition