Also known as: spendthrift clause · spendthrift provision · spendthrift trust language
Written by attorneys · grounded in primary & secondary sources — see below
A clause in a trust instrument that restrains both voluntary and involuntary transfers of a beneficiary's interest. The clause prevents a beneficiary from assigning the interest and shields it from creditors until distribution occurs.
Serena Soto created a trust for her nephew Scott Summers and inserted language stating that no beneficiary interest could be assigned or reached by creditors. When a judgment creditor attempted to attach future distributions, the court held the clause valid because it restrained both voluntary and involuntary transfers. The creditor could not reach the assets until the trustee actually distributed them to Scott.
Sophia Singh placed assets in trust for her daughter Sabrina Shah without any restraint on transfers. A creditor obtained a court order attaching present and future distributions because the absence of spendthrift language left the interest exposed. The court limited the attachment to amounts appropriate under the circumstances.
Select any source to read its text and confirm it supports the definition.
Seth Shapiro drafted trust terms stating only that distributions were subject to trustee discretion but omitted any restraint on assignment. A beneficiary's creditor successfully reached the interest because the language did not restrain both voluntary and involuntary transfers. The court treated the clause as ineffective under the validity requirement.
Stephen Shaw created a trust giving the trustee sole discretion over income distributions to his sister Starlight Media. Even though a creditor held a judgment, the court refused to compel any distribution because the spendthrift language combined with trustee discretion blocked compulsory payment. The creditor could not force the trustee to act.
Sabrina Shah's trust contained standard spendthrift language protecting her interest from creditors. After her death, a federal claim under ERISA sought to reach the trust assets for unpaid benefits. The court held that federal law preempted the state spendthrift protection, allowing the claim to proceed despite the clause.
The language must restrain both voluntary and involuntary transfers of the beneficiary's interest. A clause that merely labels the trust a spendthrift trust or uses similar words is sufficient if it meets this dual restraint requirement.
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No. During the settlor's lifetime, assets in a revocable trust remain reachable by the settlor's creditors regardless of any spendthrift language. The retained power to revoke means the settlor is treated as still owning the property for creditor purposes.
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No. A creditor generally cannot compel a distribution that is subject to the trustee's discretion, even when the trust contains spendthrift language and even if the trustee has abused discretion or applied a distribution standard.
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A court may authorize a creditor to reach the beneficiary's interest by attachment of present or future distributions. The court may tailor the relief to the circumstances of the case.
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…Grantor’s said son shall take and receive, per stirpes and not per capita , one equal share thereof absolutely.” There is a spendthrift provision for both principal and income, applicable after the death of the grantor, and it is also provided that the Trustee shall have authority to receive any other funds granted, devised, or…