By Kimberly Lankford Beyond tax and estate-planning motives, parents often use trusts to allow them to pass wealth to the next generation with some strings attached. Aside from the fact that you can't count on money as a substitute for internal motivation, incentive trusts can backfire if they're too specific. A more flexible approach would be to give your trustees discretion in doling out the money. Of course, you'll want to make sure that the trustees know your thoughts on how you want your kids brought up and what you think are appropriate expenditures.
Nothing is more frustrating, or demeaning, than always dangling the carrot just out of reach.
And more families are doing just that. Some set up an internal family bank to provide venture capital for members who want to start a business. The Kiplinger Washington Editors, Inc.