A spendthrift trust is a type of trust that controls or limits the beneficiary’s access to the trust principal.  This type of trust is commonly used to leave property to a family member that may have financial management issues or current or potential creditor issues.  The causes of these issues sometimes include addiction, gambling, a spendthrift or someone that may be prone to being deceived or taken advantage of.  You may also consider a spendthrift provision if your beneficiary is in a high risk profession, such as a medical doctor, dentist  or attorney and may be subject to a malpractice suit.

A spendthrift trust protects the grantors assets from being wasted or used imprudently as it aims to put the assets beyond the reach of the creditor. The Massachusetts Uniform Trust Code, Ch. 203E, Article 5,  s. 502 notes that a spendthrift provision is valid only if it prohibits both voluntary and involuntary transfers of a beneficial interest.  A beneficiary may not transfer an interest in a trust in violation of a valid spendthrift provision and, except as otherwise provided in the law, a creditor or assignee of the beneficiary may not reach the interest or a distribution by the trustee before its receipt by the beneficiary.  It should be noted that once assets are distributed to the beneficiary, they are generally available to creditors. You should consult with an experienced estate planning attorney if you are considering a spendthrift trust and how it may be applicable to your specific estate plan.