Spendthrift Trust Flashcards
SPENDTHRIFT TRUSTS
A spendthrift trust precludes the beneficiary from voluntarily or involuntarily transferring their interest in the trust, and the beneficiary’s creditors are precluded from reaching it to satisfy their claims. The purpose is to protect the beneficiary from their own improvidence.
Creditors Cannot Attach Beneficiary’s Interest
The beneficiary’s creditors cannot reach the beneficiary’s trust interest until income or principal has been paid to the beneficiary. Of course, once the trustee pays the beneficiary, the creditors may
reach the property.
Assignments Are Unenforceable
A beneficiary’s assignees cannot force the trustee to pay them directly. However, the trustee may choose to honor a purported assignment by the beneficiary, but the trustee may recommence payments to the beneficiary at any time, and the beneficiary may
withdraw their direction to pay the assignee
