As you take stock of the different people that you will be leaving inheritances to you are likely to feel perfectly comfortable leaving a lump sum inheritance with no strings attached to some of your heirs. However, there may be others who have not yet made their mark in the world, and you may be concerned that leaving them too much too soon may do more harm than good. You may also have people on your list who have personal problems, or a history of poor money management.
One option that you may want to consider if you do want to place some conditions on an inheritance would be to create an incentive trust. You fund the trust, appoint a trustee and name your beneficiary, and when you are drawing it up you include stipulations that must be met before distributions from the trust will be made.
For example, you could state that monthly distributions will be made as long as the beneficiary remains a student in good standing at a college or university. You may add that a lump sum will be made available as a reward for every level of education completed. And you could then instill a work ethic in the beneficiary by allowing for a dollar-for dollar match out of the trust for each dollar earned on the job by the beneficiary.
You can also use an incentive trust to guide the beneficiary away from self destructive behavior. If you had an heir who had a substance abuse problem, for instance, you could require this individual to successfully complete a rehabilitation program and subsequently submit to substance testing before distributions will be made.
These are just a couple of hypothetical scenarios, but you can basically stipulate any condition you want met as long as it is not something that is illegal.