Spendthrift Trust
Protecting inherited wealth from a beneficiary’s future creditors, lawsuits, or bankruptcy.
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Overview & Purpose
A trust incorporating strict statutory spendthrift clauses that legally prohibit a beneficiary from pledging, selling, or encumbering their future inheritance, blocking creditors from reaching principal before distribution.
Who May Consider It
- You worry an heir may struggle with compulsive spending, debt, addiction, or marital instability.
- You want your life’s earnings protected from your child’s future potential divorce or business failures.
- Prevents creditors of the beneficiary from attaching liens to undistributed trust assets.
- Authorizes trustee to make distributions directly to service providers rather than handing cash to the heir.
- Does NOT protect the grantor if the grantor names themselves as the beneficiary in non-DAPT states.
Important Trade-offs
- Trustee must exercise vigilant oversight, which can strain interpersonal family dynamics.
Relevant Assets
Governed by state spendthrift statutes under UTC § 502.
Questions to Discuss with an Attorney
- What statutory exceptions (child support, restitution) penetrate spendthrift clauses in our state?
Related Documents
Sources & References
This article was prepared using publicly available legal and government sources. Laws change, and readers should verify current rules in their jurisdiction.
Reviewed for educational accuracy
Last reviewed: September 30, 2026 · Next scheduled review: March 2027
This article is educational information and is not legal advice. Laws vary by jurisdiction. No attorney has reviewed this material unless a named, licensed attorney is credited above.
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