All About Estates

Incenting From Beyond the Grave!!

This Blog today written by : Robert Boyd,LLB., Senior Manager at ScotiaWealth Management

Although the title of this blog is largely tongue-in- cheek, there is some validity to exploring how trusts can be used to incentivise or encourage the next generation to be successful or at the very least contributing to society in a positive way.

There has been a trend over the last number of years whereby self-made entrepreneurs’ have articulated in some shape or form that they do not wish to leave their vast fortunes to their children. Bill Gates, Warren Buffett & Sting have publicly commented on their intentions not to give their entire estate to their children. However, one English billionaire by the name of Peter Jones has gone one step further and has spoken publicly on how he intends to pass his wealth on to his children in a unique but intriguing manner. He does not want his children to live off his fortune and has set up a match-funding trust with his children as beneficiaries. Once they chose their career path, any income that his children generate will be matched by a contribution from the trust. If one of his children decides to work in the charitable sector there will be an additional payout.

Incentive trusts are not a new concept; however, it may be time to take another look at when and how they can be used. In many cases when a parent realises that their child may need some ‘gentle encouragement’ in the form an incentive trust and the prospect of a diminished inheritance, it may be too late and cause anguish for all the parties involved. How to transfer wealth to children in a fashion that does not hinder their motivation and ability to be successful in their own right is a topic that Peter Jones has obviously spent a great deal of time deliberating and formulating a strategy.

The key to the success of a Peter Jones’s strategy may lie in the timing and execution of his plan. When he first began to speak about his strategy, his children were all under the age of 15 and by doing so he has laid the groundwork for what they can expect once they begin their careers. In setting this expectation, he may effectively be changing the mindset of his children long before the terms of the trust will ever come into play. Some of you reading this blog will encounter clients who have similar concerns about their estate plan but I can suggest two simple things to keep in mind when to implementing a successful incentive trust; plan as early as possible and keep everybody informed of what lies ahead.

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About Paul Fensom
Scotiatrust offers a full range of estate, trust and philanthropic advisory services designed to meet a client’s personal objectives and designed to evolve across a variety of life stages and financial events. Email: