Legal Definitions - facility-of-payment clause

A facility-of-payment clause is a provision in an insurance policy or trust that allows someone to receive payment on behalf of the beneficiary. This means that the beneficiary can appoint someone to receive the payment from the insurer or trustee.

For example, if someone has a life insurance policy and they pass away, the beneficiary may not be able to receive the payment directly. However, if there is a facility-of-payment clause in the policy, the beneficiary can appoint someone to receive the payment on their behalf.

In a trust, a facility-of-payment clause allows anyone who owes money to an incapacitated beneficiary to pay the money owed to the custodial trustee. This means that the trustee can receive the payment on behalf of the beneficiary and use it for their care and well-being.

Overall, a facility-of-payment clause is a useful provision that allows someone to receive payment on behalf of the beneficiary in certain situations.