Legal Definitions - beach bum trust provision

A beach bum trust provision is a specific clause inserted into a trust document by the person creating the trust (known as the "grantor" or "settlor"). The primary purpose of such a provision is to encourage the beneficiaries to be productive, self-sufficient, and engaged in meaningful activities, rather than relying solely on the trust's assets without personal effort. These provisions establish conditions or requirements that beneficiaries must meet to receive all or part of their inheritance or distributions from the trust, often linking financial benefits to employment, education, or other achievements.

Here are some examples illustrating how beach bum trust provisions can be implemented:

• Matching Income Provision: Imagine a trust established by a grandparent that states a beneficiary will receive an annual distribution from the trust equal to 75% of their earned income from a legitimate job, up to a maximum of $50,000 per year. If the beneficiary earns $40,000 in a year, they would receive an additional $30,000 from the trust. If they earn $80,000, they would receive the maximum $50,000 from the trust.

  How it illustrates the term: This provision directly incentivizes the beneficiary to seek and maintain employment, as their personal earnings directly increase the amount they receive from the trust, promoting financial independence rather than passive reliance on the inheritance.

• Educational or Professional Milestone Provision: A trust might stipulate that a beneficiary will receive a significant lump sum distribution, for example, $250,000, only upon completing a bachelor's degree from an accredited university, or upon successfully passing a professional licensing exam (such as for medical doctors, engineers, or certified public accountants).

  How it illustrates the term: This condition encourages the beneficiary to pursue higher education or a professional career path, rewarding them for achieving a specific, challenging life goal that demonstrates ambition and skill development.

• Consistent Employment or Community Service Provision: A trust could be structured so that a beneficiary receives quarterly distributions only if they can demonstrate continuous full-time employment for the preceding six months, or if they have volunteered a minimum of 20 hours per month with a recognized charitable organization for the past year. If these conditions are not met, the distribution for that quarter is withheld or reduced.

  How it illustrates the term: This provision promotes ongoing engagement in productive activities, whether through paid work or meaningful community contribution, ensuring the beneficiary is actively contributing to society or their own financial well-being to qualify for trust funds.