An accumulation trust is a trust in which the trustee does not distribute the income from the trust, but instead gathers the income and any profits from sale of trust assets and holds these in the trust until the trust terminates (at a time specified in the creating document).
These trusts are disfavored, and often limited by law on a state-by-state basis.
Definition from Nolo’s Plain-English Law Dictionary
A trust in which the income is retained and not paid out to beneficiaries until certain conditions are met. For example, if Uncle Pierre creates a trust for Nick's benefit but directs that Nick not get a penny until he gets a Ph.D in French; Nick is the beneficiary of an accumulation trust.
Definition provided by Nolo’s Plain-English Law Dictionary.
August 19, 2010, 5:10 pm