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Spendthrift Trust

Definition - What does Spendthrift Trust mean?

A spendthrift trust is a trust created for someone who is not yet ready to manage their own money, or who is incapable of managing their own money. It is specifically designed to prevent the unauthorized use or transfer of funds by the beneficiary, or to keep the beneficiary from obtaining credit.

Justipedia explains Spendthrift Trust

A spendthrift trust protects the beneficiary until such time that they can manage their own finances, specifically any assets included in the trust. One of the ways it does so is by preventing creditors from getting a hold of such assets in order to satisfy any outstanding debt.

The beneficiary's access to trust funds or other assets in such cases is carefully controlled by the designated trustee. When and how the trustee distributes funds to the beneficiary varies depending on the provisions set forth in the trust.

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