How a Spendthrift Clause May Protect a Trust from Creditors
Are you concerned that your beneficiaries may still have a long way to go in learning to handle money? If so, you may want to protect them from misusing their inheritance by installing a spendthrift clause into your trust. What does this provision do? How can it protector your heirs from creditors?
The Benefits of a Spendthrift Trust
Once funds have been distributed to a benefactor, creditors can go after these assets. However, funds that are not under control of the heir or that have not yet been dispersed can be protected from certain creditors. This is where a spendthrift clause comes into play.
In a spendthrift trust, the funds are under the control of a trustee who distributes funds to the heir when he or she sees fit. Since the beneficiary cannot access these funds at will, they are not considered to be his or her property. This provides the additional protection from creditors who can only go after what the beneficiary actually owns.
There are, however, exceptions to every rule. For example, a court may direct that child support or alimony payments that have been awarded can be taken from a spendthrift trust.
Learn More About Your Estate Planning Options
To learn more about your estate planning options, contact the experienced attorneys at Petrov Law Firm by calling 619-344-0360. From developing an estate plan from scratch to reworking an outdated plan, we can help you to prepare for the future with confidence.
