What is a Spendthrift Trust and Why Would You Use One?
Sept. 20, 2022
A spendthrift trust is a legal arrangement in which a trustee is appointed to manage the assets of a trust for the benefit of a person who is unable to manage their own finances. This type of trust can be very helpful for people who are prone to overspending or who may have a history of bad financial decisions.
If you are worried about how your loved one will handle their finances if they are given control of inherited money, then a spendthrift trust may be right for you!
What are the Benefits of a Spendthrift Trust?
Some of the benefits of a spendthrift trust include:
The trustee can help to protect the assets of the trust from creditors or lawsuits.
The trustee can help to ensure that the beneficiary does not squander the trust’s assets.
The trustee can provide financial oversight and guidance to the beneficiary.
Why Would You Use a Spendthrift Trust?
Spendthrift trusts are beneficial if you have a loved one or potential heir that is facing legal or financial difficulties. Also, if your heir has a disability that makes it difficult for them to manage their own money, a spendthrift trust may be a wise idea. Finally, if an heir or beneficiary is being sued, going through a contentious divorce, or in bankruptcy, it can be wise to place their assets in a trust so that creditors or former spouses cannot access the trust assets.
Of course, everyone’s personal circumstances are different, and it is important to consult with an experienced trust attorney to determine whether a spendthrift trust is best for you or your loved ones.
Our Office Can Help
If you are considering setting up a spendthrift trust for your loved one, it is important to consult with an experienced trust attorney who can help you determine if this type of trust is right for your situation. Trusts can be complex legal documents, so it is important to make sure everything is done correctly so you avoid any problems down the road.
Click here to Schedule a FREE Virtual Estate Planning Session to learn more about spendthrift trusts and how we can help you!
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Discuss the importance of savings with your children when they are young. As they grow older, help them to understand credit and how to use it wisely. Building good financial habits now will help your children throughout their lives!