Do you have a beneficiary who might not use property wisely or get into trouble with creditors?
A spendthrift trust ensures that some trust property can be made available to the beneficiary, without the possibility that the beneficiary could take it all at once.
The spendthrift trust puts restrictions on the beneficiary’s access to trust principal. Since the beneficiary can not access the trust funds, neither can his or her creditors.
Instead of having direct access to the trust property, the beneficiary receives benefit from the trust through the trustee named in the trust. How and when the trustee makes payments to the beneficiary is determined by the terms of the trust.
There are a variety of reasons why a grantor might not trust a beneficiary with the responsibility of controlling his or her funds:
- Not good with money
- Has an addiction that could cause him or her to squander the funds
- Might be easily deceived or defrauded
- Might easily fall into debt with creditors.