Irrevocable Trust Payment to Organization on Behalf of Beneficiary
I believe that I have read in a prior post by you that for an Irrevocable Trust, the Trustee can never pay any funds to someone not named as beneficiary of that Trust. My question is: can assets from the Trust be paid to an organization/entity on behalf of a beneficiary? For example, can payment for college tuition be paid directly to a University where the beneficiary is enrolled if allowed in the Trust language? Same question regarding payment to a Hospital for a major medical bill not coved by the beneficiary insurance policy and/or to an Auto Dealership for an annual lease of an automobile specifically for the beneficiary? Finally, if the student beneficiary should withdraw/cancel classes prior to a deadline and be due a refund for tuition paid, must that refund be paid to the beneficiary for whom paid or can that refund be paid/returned to another beneficiary named in the Trust or just to the Trust itself rather than another named beneficiary? The idea here is to not reward the student with a cash windfall for withdrawing from classes. Could that subject refund be paid to a Charitable Trust for teacher education since that Trust is not named as a direct beneficiary anywhere in the Trust document?
Permalink Submitted by Alan - IRA critic on Tue, 2025-04-08 15:41
It depends on the terms of the trust whether the trustee can make payments on behalf of the beneficiary. For a particular trust this question should be posed to the attorney who drafted the trust.