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What Happens to Endowment Funds If School Closes?

Posted by Nina Whitehurst | Dec 15, 2017 | 0 Comments

If a university closes its doors, there is a slight chance of getting endowment money back.

Every year hundreds of schools close their doors permanently, but still have money in their endowment funds with some chance of recovery by donors, according to the Wills, Trusts & Estates Prof Blog in "Orphan Endowments of Dead Schools Bedevil U.S. States."

The big problem with getting the funds returned?

When a school closes, there are many people who would like to have the money that is leftover in the endowment funds.

The descendants of wealthy donors would like to have the money, as would the bondholders and other creditors of the schools.

The Attorney General of the state has to figure out who gets the money and state laws are not always clear on the subject. That creates big headaches for people over what are often relatively small sums.

If you or an ancestor of yours has given money to a small school that has closed, you should know that you can try and get that money back but your chances of success is not good.

Reference: Wills, Trusts & Estates Prof Blog (Nov. 17, 2017) "Orphan Endowments of Dead Schools Bedevil U.S. States."

About the Author

Nina Whitehurst

Attorney at Law Nina has been practicing law for over 30 years in the areas of estate planning, real estate and business law She is currently licensed in Alaska, Arizona, California, Colorado, Oregon and Tennessee. Her Martindale-Hubbell attorney rating is the highest achievable: 5 stars in peer...


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