What Is A Spendthrift Trust?

A spendthrift trust is a trust that restricts the beneficiary’s ability to access or obligate trust principal. It can be used to protect a beneficiary who might not use the trust funds wisely or who has a lot of outstanding debts. A spendthrift trust can be drafted to give the trustee total discretion in how to use the trust funds, or it can be drafted with specific terms about how the trust funds are to be used. Either way, the beneficiary cannot control how the trust funds are used.

Spendthrift trusts can provide important protection for beneficiaries who do not manage money well, might be victims of designing person, or who have significant debts. Spendthrift trusts should be carefully drafted to address the concerns and needs of the beneficiary.