Also known as: spendthrifts · spendthrift trust
Written by attorneys · grounded in primary & secondary sources — see below
A term of a trust that restrains both voluntary and involuntary transfer of a beneficiary's interest. The restraint prevents the beneficiary from assigning the interest and bars creditors from reaching it before distribution.
Frank created an irrevocable trust for Bob and included a clause stating that Bob's interest shall not be anticipated or assigned by him or reached by his creditors. Mountain Byte later obtained a judgment against Bob and sought attachment of future distributions. The clause satisfied the requirement that a spendthrift provision restrain both voluntary and involuntary transfers, so the creditor could not reach undistributed amounts.
Stella Shapiro created a trust for her son without any restraint on transfers. A creditor obtained a judgment and asked the court to attach present and future distributions. Because the beneficiary's interest was not subject to a spendthrift provision, the court authorized attachment of distributions to satisfy the judgment.
Select any source to read its text and confirm it supports the definition.
Solomon Silver funded a trust for his daughter that stated only that her interest could not be assigned. A judgment creditor sought to reach future distributions. The clause failed to restrain involuntary transfers and therefore did not qualify as a valid spendthrift provision.
Sophia Singh created a trust stating that the beneficiary's interest was held subject to a spendthrift trust. A creditor attempted to attach distributions before receipt. The words of similar import were sufficient to restrain both voluntary and involuntary transfers.
Samantha Stone created a discretionary trust for her niece with language allowing distributions for health and education. A tort creditor sought to compel distributions to satisfy a judgment. The creditor could not force distributions even though the trust contained a spendthrift provision.
A beneficiary held an interest in a spendthrift trust while marital dissolution proceedings were pending. The nonparticipant spouse sought to reach the interest to satisfy support obligations. The spendthrift protection yielded to the support claim under applicable domestic relations principles.
A clause stating that the beneficiary's interest shall not be anticipated, assigned, or reached by creditors restrains both voluntary and involuntary transfers. Words of similar import such as holding the interest subject to a spendthrift trust also suffice.
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A valid spendthrift provision prevents a creditor from reaching the beneficiary's interest or distributions before the trustee delivers them. Once the beneficiary actually receives a distribution, the funds become subject to ordinary creditor remedies.
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No. State law creates an exception allowing a former spouse or child with a support judgment to attach present or future distributions. The court may order the trustee to pay an equitable amount not exceeding what the trustee would have distributed under the standard.
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Generally no. A creditor may not compel a distribution subject to the trustee's discretion even if the trust contains a spendthrift provision. An exception exists when the claim is for child or spousal support and the trustee has failed to comply with a standard or abused discretion.
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…see Marriage of Campa, supra , at 124, 152 Cal. Rptr., at 367-368, and the basic principle that a beneficiary's interest in a spendthrift trust, despite otherwise applicable protections, can be reached in the context of divorce and separation. See E. Griswold, Spendthrift Trusts 389-391 (2d ed. 1947) (summarizing state case law);…