spendthrift trust

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  • noun

Words related to spendthrift trust

a trust created to maintain a beneficiary but to be secure against the beneficiary's improvidence

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51) If a settlor creates a trust for his own benefit and inserts a spendthrift clause, it is void as far as then existing or future creditors are concerned, and they can reach his interest under the trust.
suggests in both the summary and The Florida Bar Journal, "The fact that spendthrift clauses are unenforceable against exception creditors means only that these creditors have remedies against a beneficiary's interest similar to those of creditors of beneficiaries with interests in a trust that does not include a spendthrift provision.
If a court enforces a trust's spendthrift clause, then the beneficiary's interest in the trust is not available to satisfy the claims of the beneficiary's creditors.
If stocks in a C or S corporation are transferred, accumulated distributions on the stock may be protected from both the transferor's and the transferee's creditors by the spendthrift clause.
IRS Letter Ruling 9035048 indicated that a spendthrift clause that could shift the beneficial interest to another party will prevent a trust from achieving QSST status.
For public policy reasons, some creditors may proceed against a beneficiary's interest in a trust even though the trust includes a spendthrift clause.
27) A typical spendthrift clause might read as follows:
As further insurance against the intentional or unintentional wasting of assets by S, a spendthrift clause would seem to be a logical addition to any QTIP provision, even if the QTIP is to be held in trust.
Second, because the new exemptions for retirement accounts are explicitly tied to their exemption from taxation, Patterson's distinction between retirement accounts in qualified plans that are covered by an ERISA spendthrift clause and those that were not so covered are no longer analytically useful.