Also known as: unthrifts · spendthrift
Written by attorneys — see sources below.
An archaic designation for a person who wastes or squanders property. In trust law the label identifies a beneficiary whose interest a spendthrift provision shields from both voluntary assignments and involuntary creditor claims.
Usha Upton, an unthrift beneficiary, tried to assign future trust distributions to a lender. The trust instrument restrained both voluntary and involuntary transfers of her interest. The restraint qualified as a spendthrift provision, rendering the assignment ineffective.
Uliana Ustinova, an unthrift, owed a judgment creditor. The creditor asked the court to attach present and future distributions because no spendthrift provision protected her interest. The court authorized attachment limited to amounts appropriate under the circumstances.
Ursula Ung created a trust stating that the beneficiary's interest could not be assigned or reached by creditors. Usman Uddin, the unthrift beneficiary, later attempted a voluntary transfer. The clause satisfied the requirement that a spendthrift provision restrain both voluntary and involuntary transfers.
Una Unger, an unthrift beneficiary, sought to pledge her interest as collateral. The trust stated that her interest was held subject to a spendthrift trust. That phrasing was sufficient to restrain both voluntary and involuntary transfers.
Umeko Uchida, an unthrift beneficiary, faced a creditor seeking to compel distributions. The trustee held sole discretion over distributions for her support. The creditor could not force a distribution even though the trust lacked a spendthrift provision.
Ulysses Upton, an unthrift beneficiary, obtained a final judgment protecting his trust interest from creditors. A later statute attempted to reopen that specific judgment for further creditor claims. The court refused to disturb the completed decision protecting the unthrift's shielded interest.
In 1987 petitioners filed a civil action in the United States District Court for the Eastern District of Kentucky against respondents. The complaint alleged that respondents had committed fraud and deceit in the sale of stock in 1983 and 1984 in violation of section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The District Court dismissed the action as time barred under the then-applicable Kentucky statute of limitations. While petitioners' appeal was pending in the Court of Appeals for the Sixth Circuit, the Supreme Court decided Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson on June 20, 1991. The next day the Court applied that decision to dismiss another pending appeal. The Sixth Circuit remanded petitioners' case to the District Court for further proceedings in light of Lampf. On August 13, 1991, the District Court dismissed the action with prejudice under the Lampf statute of limitations. Petitioners filed no appeal, and the judgment became final thirty days later on December 18, 1991. On December 19, 1991, the President signed the Federal Deposit Insurance Corporation Improvement Act of 1991. Section 476 of that Act added section 27A to the Securities Exchange Act of 1934. Subsection (b) provides that any private civil action under section 10(b) commenced on or before June 19, 1991, which was dismissed as time barred after that date and which would have been timely under the limitation period provided by the laws applicable in the jurisdiction as such laws existed on June 19, 1991, shall be reinstated on motion by the plaintiff not later than sixty days after December 19, 1991. Petitioners promptly filed a motion under section 27A(b) to reinstate their action. The District Court denied the motion. The Court of Appeals for the Sixth Circuit reversed, and the Supreme Court granted certiorari.
View caseThe term is an archaic designation for a prodigal or spendthrift. It identifies a person who wastes property and whose beneficial interest in a trust a spendthrift provision is designed to protect.
An unthrift beneficiary is one whose wasteful habits prompt the settlor to include a spendthrift provision. The provision prevents the beneficiary from assigning the interest and shields it from creditors until distributions are actually received.
No. The trust instrument must contain language that restrains both voluntary and involuntary transfers. Words stating that the interest shall not be anticipated, assigned, or reached by creditors are sufficient even if the term spendthrift trust is not used.
Yes. Once the trustee distributes cash or property to the beneficiary, the assets lose trust protection and become subject to ordinary creditor remedies.
…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…