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Spendthrift provisions: benefits and limitations

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One of the main goals of estate planning is to pass on assets from one generation to the next. But, how can you ensure that your financially irresponsible beneficiary won’t squander their inheritance? Or, how can you protect your beneficiary’s inheritance from the claims of their creditors? The answer lies in a spendthrift provision.

What is a spendthrift provision?

A spendthrift provision is language put into a trust that prevents a beneficiary from using a future distribution to secure credit. It also prohibits creditors from collecting payment if they extend credit to a beneficiary based on future distributions.

Trusts with a spendthrift provision are often referred to as spendthrift trusts. But, even if you have a spendthrift trust, it likely won’t be in the trust’s name. Still, your trust is probably a spendthrift trust– most trusts in the U.S. are.

If you are wondering if your trust is a spendthrift trust, just look for the spendthrift provision. A spendthrift provision might look something like this:

“Trustee shall not recognize any transfer, mortgage, pledge, hypothecation, assignment or order of a beneficiary which anticipates the payment of any part of the income or principal. The income and principal of the trust estate shall not be subject to attachment, garnishment, creditor’s bill or execution to satisfy any debt, obligation or tort of any beneficiary, nor shall any part of the trust estate pass to a trustee or receiver in any bankruptcy or insolvency proceeding initiated by or against any beneficiary.”

Note that this is just an example taken from one of our documents. Your trust’s spendthrift provision may not read exactly the same. It may be identified in the trust as “Spendthrift Provision” but it also might not. The key is that the language should prevent the beneficiary from selling or transferring their right to receive distributions.

The benefits of a spendthrift trust

The whole point of a spendthrift trust is to protect trust assets from beneficiary’s creditors. This makes them useful for a financially irresponsible beneficiary. But, they can also be helpful for those who can manage their money appropriately. Spendthrift provisions can be helpful for almost anyone. Even the most thrifty among us can get into financial trouble and those who manage their money well can still have their assets jeopardized in a lawsuit or a messy divorce. The spendthrift provision is helpful for keeping away creditors, current or future, in all of those situations.

Limitations of spendthrift provisions

While spendthrift provisions protect assets from most creditors, there are some exceptions. These exceptions vary from state to state. In Arizona, for example, spendthrift trusts may be able to be reached for child support payments. A creditor might also be able to collect those future mandatory distributions if the trust requires distributions on a regular schedule.

Spendthrift provisions really most useful in a third party trust. You can put spendthrift provision in your own trust, but it likely won’t protect assets from your creditors. The idea behind this is that the law doesn’t want you to shelter your own assets from your own creditors. However, this varies from state to state, so you should ask your attorney.

Do I need a trust for spendthrift provisions?

Maybe you’ve read this post and thought that someone in your life could benefit from a spendthrift provision, but you don’t want to make a trust. Could you put a spendthrift provision in your will? You could, but it looks a little different. Generally in a will, distributions are directed to beneficiaries outright and the assets are distributed in a short period of time. Wills can be used to create testamentary trusts though and testamentary trusts can include spendthrift provisions. If you think this might be a good option for you, talk to your estate planning attorney.

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Robert B. Fleming


Robert Fleming is a Fellow of both the American College of Trust and Estate Counsel and the National Academy of Elder Law Attorneys. He has been certified as a Specialist in Estate and Trust Law by the State Bar of Arizona‘s Board of Legal Specialization, and he is also a Certified Elder Law Attorney by the National Elder Law Foundation. Robert has a long history of involvement in local, state and national organizations. He is most proud of his instrumental involvement in the Special Needs Alliance, the premier national organization for lawyers dealing with special needs trusts and planning.

Robert has two adult children, two young grandchildren and a wife of over fifty years. He is devoted to all of them. He is also very fond of Rosalind Franklin (his office companion corgi), and his homebound cat Muninn. He just likes people, their pets and their stories.

Elizabeth N.R. Friman


Elizabeth Noble Rollings Friman is a principal and licensed fiduciary at Fleming & Curti, PLC. Elizabeth enjoys estate planning and helping families navigate trust and probate administrations. She is passionate about the fiduciary work that she performs as a trustee, personal representative, guardian, and conservator. Elizabeth works with CPAs, financial professionals, case managers, and medical providers to tailor solutions to complex family challenges. Elizabeth is often called upon to serve as a neutral party so that families can avoid protracted legal conflict. Elizabeth relies on the expertise of her team at Fleming & Curti, and as the Firm approaches its third decade, she is proud of the culture of care and consideration that the Firm embodies. Finding workable solutions to sensitive and complex family challenges is something that Elizabeth and the Fleming & Curti team do well.

Amy F. Matheson


Amy Farrell Matheson has worked as an attorney at Fleming & Curti since 2006. A member of the Southern Arizona Estate Planning Council, she is primarily responsible for estate planning and probate matters.

Amy graduated from Wellesley College with a double major in political science and English. She is an honors graduate of Suffolk University Law School and has been admitted to practice in Arizona, Massachusetts, New York, and the District of Columbia.

Prior to joining Fleming & Curti, Amy worked for American Public Television in Boston, and with the international trade group at White & Case, LLP, in Washington, D.C.

Amy’s husband, Tom, is an astronomer at NOIRLab and the Head of Time Domain Services, whose main project is ANTARES. Sadly, this does not involve actual time travel. Amy’s twin daughters are high school students; Finn, her Irish Red and White Setter, remains a puppy at heart.

Famous people's wills

Matthew M. Mansour


Matthew is a law clerk who recently earned his law degree from the University of Arizona James E. Rogers College of Law. His undergraduate degree is in psychology from the University of California, Santa Barbara. Matthew has had a passion for advocacy in the Tucson community since his time as a law student representative in the Workers’ Rights Clinic. He also has worked in both the Pima County Attorney’s Office and the Pima County Public Defender’s Office. He enjoys playing basketball, caring for his cat, and listening to audiobooks narrated by the authors.