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Is there a specific type of trust called a Spendthrift Trust?

Is there a specific type of trust called a Spendthrift Trust?

Q: Is there another name for a spendthrift trust?

A spendthrift trust is sometimes referred to simply as a 'spendthrift.' However, it is primarily known by this specific term due to its unique provisions that protect beneficiaries from creditors. There are no widely recognized alternative names that convey the same legal meaning.

Full question:

Is there a specific type of trust called a Spendthrift Trust or do regular trusts just contain a spendthrift provision?

Category: Trusts
Date: 04/07/2025
State: Michigan

Answer:

A spendthrift provision is not automatically included in all trusts. Please see:

http://definitions.uslegal.com/s/spendthrift-trust/

This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.

FAQs

What is the difference between a spendthrift trust and a regular trust?

The main difference between a spendthrift trust and a regular trust lies in the protection of trust assets. A spendthrift trust includes a provision that prevents beneficiaries from selling or using their interest in the trust assets as collateral. This protects the assets from creditors seeking to satisfy the beneficiaries' debts. In contrast, a regular trust does not automatically include such protections, allowing beneficiaries more control over their interests.

Is there another name for a spendthrift trust?

What are the disadvantages of a spendthrift trust?

One disadvantage of a spendthrift trust is that it limits the beneficiary's control over their inheritance, as they cannot sell or pledge their interest. This can be frustrating for beneficiaries who desire immediate access to funds. Additionally, setting up a spendthrift trust may involve higher administrative costs and complexity compared to simpler trust arrangements.