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When should you consider creating a spendthrift trust?

On Behalf of | Jun 16, 2024 | Trusts

A spendthrift trust can protect assets and ensure financial stability for beneficiaries who may not be financially responsible or are vulnerable to creditors. There are several reasons why this may make sense. 

Protecting beneficiaries with poor financial management skills

If a beneficiary struggles with managing money, makes poor financial decisions, or has a history of reckless spending, a spendthrift trust can provide structured financial support. 

The trust limits access to the funds. It offers regular distributions instead of a lump sum and ensures ongoing financial stability.

Shielding assets from creditors

For beneficiaries with significant debt or at risk, a spendthrift trust protects assets from creditors. It ensures the funds remain secure and used for the beneficiary’s intended purpose.

Safeguarding against divorce settlements

In the event of a beneficiary’s divorce, a spendthrift trust can protect assets from division in a settlement. It preserves the trust’s assets for the beneficiary’s future needs.

Supporting beneficiaries with special needs

A spendthrift trust can support beneficiaries with special needs without jeopardizing their eligibility for government assistance. The trust provides supplemental support for expenses not covered by these programs. 

Ensuring long-term financial support

For young or inexperienced Massachusetts beneficiaries, a spendthrift trust ensures that their inheritance lasts longer. A designed person manages the assets prudently, making distributions as needed to support the beneficiary’s education, living expenses, and other needs.

A spendthrift trust provides a layer of protection if a beneficiary gets influenced or pressured to misuse their inheritance. If any individual faces this issue, it is advisable to consult an attorney for their best interest.


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