Self-Destruct Clause: A provision in a trust that triggers its automatic termination. This provision is commonly included in trusts designed to assist individuals with special needs. For instance, if the beneficiary of the trust becomes disqualified from receiving government assistance such as Medicaid, the trust will cease to exist.
A self-destruct clause is a provision in a trust that automatically ends the trust under specific circumstances. This clause is commonly found in discretionary trusts, especially in supplemental-needs trusts. For example, a trust set up to support a disabled person may include a self-destruct provision that ends the trust if the beneficiary becomes ineligible for government-benefits programs like Medicaid. This means that if the beneficiary no longer qualifies for Medicaid, the trust will be dissolved, and the remaining assets will be distributed to the beneficiaries. Another example of a self-destruct clause is a trust that ends when the beneficiary reaches a certain age or achieves a specific goal, such as graduating from college or getting married. These examples show how a self-destruct clause can be used to ensure that the trust assets are used for their intended purpose and that the trust does not continue indefinitely. It also provides a way to distribute the remaining assets to the beneficiaries once the trust’s purpose has been fulfiled or is no longer necessary.
A self-destruct clause is a provision in a contract that allows for the automatic termination or cancellation of the agreement under certain specified circumstances.
Common triggers for a self-destruct clause include non-performance or breach of contract, bankruptcy or insolvency of one of the parties, a change in law or regulations that renders the contract illegal, or the occurrence of a force majeure event.
Yes, a self-destruct clause can be included in any type of contract, including employment agreements, lease agreements, partnership agreements, and purchase agreements, among others.
The enforceability of a self-destruct clause depends on the specific language used and the applicable laws in the jurisdiction. Generally, if the clause is clear, unambiguous, and does not violate any legal principles, it is likely to be enforceable.
In most cases, a self-destruct clause can only be triggered by one party if the triggering event is specifically outlined in the contract. However, it is important to review the contract language and consult with a legal professional to determine the specific rights and obligations of each party.
Yes, like any other contractual provision, a self-destruct clause can be negotiated and modified by the parties involved. It is important to carefully review and discuss the terms of the clause during contract negotiations to ensure it aligns with the interests and objectives of all parties.
If a self-destruct clause is triggered, the contract will be automatically terminated or cancelled as specified in the clause. The parties may have additional obligations or rights upon termination, such as the return of any payments made or the resolution of any outstanding disputes.
In some cases, a self-destruct clause may be waived or overridden by mutual agreement of the parties involved. However, this would typically require a formal amendment to the contract and should be done in writing to avoid any potential disputes.
While self-destruct clauses are generally permissible, there may be legal limitations depending on the jurisdiction and the specific circumstances. For example, certain consumer protection laws may restrict the use of self-destruct clauses in certain types of contracts.
It is highly recommended to consult with a lawyer before including a self-destruct clause in a contract. A legal professional can provide guidance on the enforceability of the clause, help draft clear and precise language, and ensure that the clause aligns with your specific legal needs and objectives.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 17th April 2024.
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