Also known as:prodigals · prodigus · prodigi · spendthrift
Written by attorneys · grounded in primary & secondary sources — see below
in civil law
A person whose affairs are managed by a curator because of wasteful spending or other bad conduct. In Roman law the agnatic family of a prodigal could prohibit the person from engaging in certain legal transactions and place the estate under a curator.
Sources & Authorities
How it applies
Common Examples
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Spendthrift Restraint on Prodigal Beneficiary
Patrick Phan created an irrevocable trust for his son Parker Phillips, a known prodigal who had squandered prior inheritances on speculative ventures. The trust instrument stated that Parker's interest shall not be anticipated or assigned by him or reached by his creditors. When a judgment creditor sought to attach future distributions, the court upheld the clause as a valid spendthrift provision because it restrained both voluntary and involuntary transfers.
Creditor Attachment Absent Spendthrift Clause
Portia Price established a trust for her daughter Paula Pierce, a prodigal who had run up large gambling debts. The instrument contained no spendthrift language. After a creditor obtained a judgment, the court authorized attachment of present and future distributions to Paula because her interest was not protected by any restraint on voluntary or involuntary transfer.
Select any source to read its text and confirm it supports the definition.
Uniform Acts
Restatements
Dictionaries
Validity of Spendthrift Language for Prodigal
Patricia Patel funded a trust for her nephew Parker Phillips, a prodigal with a history of poor financial decisions. The trust stated that the beneficiary's interest shall not be assigned or subject to creditors' claims. A court held the provision valid because it restrained both voluntary and involuntary transfers even though it never used the phrase spendthrift trust.
Similar Import Language Creates Restraint
Paige Porter created a trust for her brother Patrick Phan, a prodigal who had previously assigned interests to lenders. The instrument provided that the beneficiary's interest is held subject to a spendthrift trust. The court enforced the clause against an assignee because words of similar import suffice to restrain both voluntary and involuntary transfers.
Discretionary Distributions Immune from Creditors
Paragon Construction funded a discretionary trust for its founder Paula Pierce, a prodigal whose spending threatened the family business. The trustee refused a creditor's demand for distributions even though the trust used an ascertainable support standard. The court denied compulsion because a creditor may not force distributions subject to the trustee's discretion whether or not a spendthrift provision exists.
Final Judgment Bars Legislative Reopening
Pacific Bank obtained a final judgment against a prodigal borrower whose trust interest had been reached by creditors. Congress later passed a statute directing courts to reopen such judgments. The court refused to reopen the case, holding that separation of powers prevents legislative interference with final judicial determinations.
Plaut v. Spendthrift Farm, Inc.514 U.S. 211, 228 (1995)
Common questions
Frequently Asked
5
What makes a spendthrift provision valid under the Uniform Trust Code?+
A spendthrift provision is valid only if it restrains both voluntary and involuntary transfer of a beneficiary's interest. Words of similar import are sufficient to create the restraint.
May a creditor reach a beneficiary's interest when no spendthrift provision exists?+
Yes. To the extent a beneficiary's interest is not subject to a spendthrift provision, a court may authorize a creditor to reach the interest by attachment of present or future distributions or by other appropriate means.
Does a spendthrift provision protect against all creditors?+
No. A spendthrift provision does not prevent a state or the United States from reaching the interest when a statute or federal law so provides. Certain support creditors may also obtain relief under statutory exceptions.
Can a court compel distributions from a discretionary trust to satisfy a creditor?+
Generally no. Whether or not the trust contains a spendthrift provision, a creditor may not compel a distribution subject to the trustee's discretion even if the discretion is expressed as a standard or the trustee has abused the discretion, subject to limited exceptions such as support claims.
What happens to distributions once the trustee actually pays them to the beneficiary?+
Once a distribution reaches the beneficiary, it is no longer protected by a spendthrift provision and becomes subject to ordinary creditor remedies.
514 U.S. 549 (1995)Constitutional Law
…v. Valeo , 424 U. S. 1 (1976); INS v. Chadha , 462 U. S. 919 (1983); Bowsher v. Synar , 478 U. S. 714 (1986); Plaut v. Spendthrift Farm, Inc., ante , p. 211. These standards are by now well accepted. Judicial review is also established beyond question, Marbury v. Madison , 1 Cranch 137 (1803), and though we may differ…