A trust containing a spendthrift clause that restricts the beneficiary's ability to transfer their interest and shields trust assets from the beneficiary's creditors. The trustee has discretion over distributions, protecting against improvident beneficiaries who might waste the inheritance or have it seized by creditors.
A spendthrift trust protects inheritance from irresponsible beneficiaries and their creditors. The trustee controls when and how much money is distributed, so a spendthrift beneficiary can't blow through their inheritance immediately or have creditors seize it before they receive it.
⏱ When you'll encounter this term
- Planning inheritance for financially irresponsible beneficiaries
- Protecting assets from beneficiaries with addiction issues
- Shielding inheritance from beneficiary's creditors or lawsuits
- Estate planning for special needs or vulnerable adults
"Grandma set up a spendthrift trust for my cousin who has struggled with addiction and debt. The trustee pays his rent and necessities directly, but my cousin can't demand lump sums or use his future inheritance as collateral for loans. It keeps him housed and fed without enabling his problems."
⚖️ Compare: Spendthrift Trust vs Outright Inheritance
Trustee controls distributions. Protected from creditors and beneficiary's poor decisions. Ongoing management required.
Beneficiary receives and controls everything. No ongoing protection. Can be wasted or seized by creditors immediately.
💡 Did you know?
You cannot create a spendthrift trust for yourself—you can't shield your own assets from your creditors by putting them in a spendthrift trust where you're the beneficiary. Spendthrift protection only works for trusts created by someone else for your benefit.