I am the sole beneficiary of a trust. In the trust it says:
"The Trustee has complete discretion for the payment of net income or any part thereof, to the Primary Beneficiary for his health, education, maintenance and support, or to accumulate the same or apply it for his benefit, but only after the Primary Beneficiary has provided to the Trustee proof satisfactory to the Trustee that the Primary Beneficiary has completed his high school diploma through his home-schooling program. A graduate equivalency diploma (GED) shall not be sufficient proof."
Is this a drafting error? Shouldn't it read "BUT ONLY UNTIL," instead of "only after"? This does not make sense that the trustee would gain complete discretion AFTER I graduate. So, as it currently stands, I was better off not graduating???
I would want to know more about the situation and also know about what rights the trustee has regarding principal and income distributions, but in reading this I believe it means most likely that the trustee must not distribute INCOME until the primary beneficiary completes high school.
I do not know if it is the case here, but many trusts for minors allow the trustee to distribute principal and/or income for Health, education, maintenance and support (HEMS), then after a certain age or milestone (graduation for example) they HAVE to distribute income (sort of like extra icing on the cake) on top of HEMS payments. That may not be the case here but that is typical
This is not legal advice nor intended to create an attorney-client relationship. The information provided here is informational in nature only. This attorney may not be licensed in the jurisdiction which you have a question about so the answer could be only general in nature. Visit Steve Zelinger's website: http://www.stevenzelinger.com/
I understood the provision the same way as Attorney Zelinger. The Trustee has discretion to distribute income to you, after you graduate. Put another way, by graduating, you received the right to discretionary payments of income.
*** LEGAL DISCLAIMER I am licensed to practice law in the State of Michigan and have offices in Wayne and Ingham Counties. My practice is focused in the areas of estate planning and probate administration. I am ethically required to state that the above answer does not create an attorney/client relationship. These responses should be considered general legal education and are intended to provide general information about the question asked. Frequently, the question does not include important facts that, if known, could significantly change the answer. Information provided on this site should not be used as a substitute for competent legal advice from a licensed attorney that practices in your state. The law changes frequently and varies from state to state. If I refer to your state's laws, you should not rely on what I say; I just did a quick Internet search and found something that looked relevant that I hoped you would find helpful. You should verify and confirm any information provided with an attorney licensed in your state.
Does the document deal with distribution of principle?
Does the document provide any other benefit before graduation?
Does the document provide any distribution of principle to anyone else?
What did you get if you were better off not graduating?
Maybe the drafter of the document can give you the reasons for the way the document was drafted.
The answer given does not imply that an attorney-client relationship has been established and your best course of action is to have legal representation in this matter.
This is not a drafting error. What the trust language means is that "until" you graduate, the Trustee cannot make any distributions to you. Only "after" you graduate is the Trustee allowed to make distributions to you. This is a common incentive trust that compels you to do something before you are eligible for any benefits from the trust.
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