← Back to Learning Center

Spendthrift Clause

What is it?

A spendthrift clause prevents beneficiaries from assigning, pledging, or selling their interest in the trust before they receive it. It also protects the trust assets from creditors of the beneficiaries. This means that if a beneficiary owes money to someone, that creditor generally cannot reach into the trust to satisfy the debt.

Why is it important?

This clause is essential for protecting your beneficiaries from themselves and from outside claims. If a beneficiary has spending problems, gets divorced, or faces a lawsuit, the trust assets remain protected until distributed. It's particularly valuable for younger beneficiaries or those who may be financially irresponsible.

Example Language

No beneficiary shall have the power to anticipate, assign, or encumber any interest in the trust, nor shall any interest be liable for the beneficiary's debts, obligations, or liabilities, or be subject to any judgment, garnishment, or other legal process.