John Michael Grant, has made available for download his paper, “Complications in Putting Unborn Spoiled Brats to Work: Using Lessons from Labor Supply Theory to Design Incentive Trusts.” The Abstract is as follows::
Labor Supply Theory has never been applied to estate planning, despite its relevance to the design of incentive trusts. I first discuss common incentive trust structures and goals, and possible alternative provisions designed to encourage a beneficiary to engage in productive work. Next, I give a brief presentation of labor supply theory and indifference curve modeling. I then apply the models to alternative incentive trust structures and will offer arguments for the adoption of a minimum salary structure with wage enhancements. I conclude by offering reasons to doubt certain underlying assumptions and to hesitate before advising clients to adopt the recommended structure.
Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal.