How Does a Spendthrift Trust Differ from an Asset Protection Trust?
My clients often want to protect their legacy from their own children’s poor planning or misfortune. A trust offers protections many beneficiaries cannot obtain for themselves from creditor claims, untutored investment choices, overspending and unnecessary taxation. These protections, especially from the beneficiary’s own extravagance, fuel the greatest interest in asset protection provisions.
Black’s Law Dictionary defines a “spendthrift” as: “One who spends money profusely and improvidently; a prodigal; one who lavishes or wastes his estate.” A “spendthrift trust” is: “A trust created to provide a fund for the maintenance of a beneficiary and at the same time to secure the fund against his improvidence or incapacity … and places it beyond his creditor’s reach.”
Most trusts include a “spendthriftUniform Voidable Transaction Act (UVTA), which has been adopted in some form in 44 states, Washington, D.C., and the U.S. Virgin Islands.
