Financial Management
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INCENTIVE TRUSTS It can provide additional structure for a beneficiary by using incentives, so as goals are accomplished within a treatment plan that includes caregivers, physicians, therapists, and others, the beneficiary will receive funds. The When it comes to financial and estate planning, it can be especially structure could be cash incentives, but a trust can also ensure that the money difficult to know what to do with a beneficiary who has previously is spent in a particular way, avoiding the potential that the money itself demonstrated poor behavioral patterns. Questions emerge about whether is abused. For example, instead of making a cash distribution, the trustee a financial windfall might actually create more problems than it solves and could be in charge of paying for particular expenses such as a car, vacation, about how to know who to trust with their care. or club membership every year should the beneficiary remain sober. Love being blind often causes us to not realize problems are problems until Being a caregiver is a difficult job and being impartial toward those we care it’s too late (or much more difficult) to solve them, which is why an outside about can be nearly impossible. Care needs to be ongoing and responsive perspective can be important. to changing circumstances. Being a trustee for a beneficiary with substance An incentive trust is a trust that includes provisions requiring beneficiaries abuse issues isn’t easy either. One needs to be careful about distributions to meet certain conditions before the trustee can distribute funds. This so as not to jeopardize other government benefits, one may face difficulties means that the funds can only be accessed in specific situations or for in verifying whether goals are met that would trigger distributions, and specific needs. Some incentive trusts give the trustee the authority to spread additional coordination may be needed to set up a treatment team beyond distributions out so the beneficiary doesn’t receive them all at once, but the the standard team a trust department may work with. incentives can be much more varied. Mr. Hagen notes that “Sometimes individual trustees end up resigning Incentives don’t only need to target negative behavior, such as drug abuse, from the trust due to emotional fatigue.” The best trustee might end up either. For example, a provision encouraging positive behavior might be to being someone that is most familiar with the situation, but it may also be encourage charitable work or giving, offering to provide extra funds for a appropriate to have a co-trustee that deals with many cases of this nature. beneficiary as a reward for volunteer work or to match their charitable gifts. Mr. Hagen also notes that the best institutional trustee choice would likely Martin J. Hagan, J.D. wrote a three part guide for Kiplinger “Designing be one that has familiarity with special needs trusts, such as Garden State Trusts for Beneficiaries with Substance Abuse Problems” that goes over some Trust Company, since we are already familiar with social workers and case of the incentive trust basics. The most important take-away from this article managers that have experience with the medical and health needs of disabled is that the trust is not a magical lamp that will necessarily solve the problem. beneficiaries. “The denial of assistance is sometimes the greatest assistance. The trick is recognizing when this is the case.” - Richelle E. Goodrich
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November/December 2021
