From our “Ask a Question” mailbag: I was told that I should make the Irrevocable Trusts I am setting up for my children “Spendthrift” Trusts. What does that mean, and what is the advantage of a Spendthrift Trust?
A Spendthrift Trust refers to an Irrevocable Trust created for a beneficiary that does not give the beneficiary the right to assign his or her interest in the trust to a third person, so that the trust assets are not subject to the beneficiary’s liabilities or creditor claims. This way a trust for a child can be used to support the child, but will not be dragged into the child’s creditors claims, bankruptcy or divorce. This can be a huge advantage to your child, as we could draft a trust that would keep the assets safe to support your child should they ever fall on hard times.
If you have any other questions about Spendthrift Trusts, feel free to contact our office for a free consultation.