Sections Contest Property disposition Common types Other types Governing doctrines In American estate planning parlance, an incentive trust is a trust designed to encourage or discourage certain behaviors by using distributions of trust income or principal as an incentive.
A typical incentive trust might encourage a beneficiary to complete a degree, enter a profession, or abstain from harmful conduct such as substance abuse.
Although incentive trusts have apparently become more common in the early 21st century, a 2007 survey found that less than one-third of wealthy Americans attach conditions to the distribution of their estates.
"[2] Eileen Gallo, a noted psychotherapist, has argued that, although incentive trusts may be effective in changing behavior, they may in fact be damaging to the beneficiaries, in that they rely on external motivation to encourage activities that should be autotelic in nature.
[3] The seeming popularity of incentive trusts, however, is reflected in the many websites created by estate planners to market them.