Legal Question in Wills and Trusts in California
Incentive Trust
An incentive trust contains a special
provision that a beneficiary must go
to college. The trust will pay for
college if there is a demonstrated
financial need. If the beneficiary
drops out of college or does not
complete a degree, the Trust clearly
states that the beneficiary ''...shall
thereafter be deemed disinherited
from the trust....''.
The trustee insists that the
disinherited beneficiary would have to
pay back the trust. However the
Trust contains no pay back clause or
language. In addition the funds paid
for college were not treated as a loan.
The Trust does state that upon
graduation, the beneficiary would
receive the balance (whatever is left
after paying for college).
My question: does a disinherited
beneficiary have to reimburse the
trust?
1 Answer from Attorneys
Re: Incentive Trust
Generally, if the trust does not require repaymet, then there should not be any required.
According to what you wrote, (and I can only base this response on what you provided), the penalty for not completing college is disinheritance, not repayment.
I would need to review the complete section of the trust (if not the trust in its entirety) to really give you a more detailed answer.
If you are located in or near Southern California, our office is located in Pasadena, CA and I would be happy to review the trust instrument for you.
Please feel free to contact me through the email provided by LawGuru or through our firm's site at PasadenaEstatePlanning.com.
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