The clause prevents voluntary and involuntary alienation of a beneficiary's interest. Exception creditors including child support obligees, spousal support claimants, and government claims may reach the interest in many states.
Self-settled spendthrift trusts are permitted in some states.
Alternative Names:
Spendthrift Clause|Spendthrift Trust
Why it Matters?
Exception creditors reach spendthrift interests despite the clause, and child support obligees are the most consistently recognized category, which means the protection is incomplete against family obligations. The provision also affects trust modification and termination, since courts treat it as a material purpose in most states and thereby foreclose beneficiary-consent termination. That secondary effect frequently outlasts the creditor protection in importance.
Frequently Confused with
Related terms
Frequently asked questions
Which creditors reach spendthrift interests?
What is the secondary effect?
