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A spendthrift provision creates an irrevocable trust preventing creditors from attaching the interest of the beneficiary in the trust before that interest (cash or property) is actually distributed to him or her. Most well-drafted irrevocable trusts contain spendthrift provisions even though the beneficiaries are not known to be spendthrifts.
The spendthrift clause has three general exceptions to the protection afforded: the self-settled trusts (if the settlor of a trust is also a beneficiary of a trust), the case when a debtor is the sole beneficiary and the sole trustee of a trust, and the support payments (a court may order the trustee to satisfy a beneficiary's support ...
A spendthrift trust is an example of an arrangement containing an anti-alienation provision. The governing document of such a trust provides that the trust corpus may not be reached by creditors while the property is held in the trust. [1] Creditors aware of this legal restriction on alienation may choose not to lend to the spendthrift.
Planning your estate plan for when the time comes can be challenging, especially if you have a significant amount of assets with beneficiaries who lack the financial responsibility to use it ...
Courts may generally recognize spendthrift clauses against trust beneficiaries and their creditors, but not against creditors of a settlor. [ 28 ] Wills and estate planning: Trusts frequently appear in wills (indeed, technically, the administration of every deceased's estate is a form of trust).
Created Date: 8/30/2012 4:52:52 PM
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Even if someone’s a spendthrift, they could still value financial security and investing in the things they know over those they don’t or that carry higher risk.