What is a spendthrift trust?

A spendthrift trust is a type of trust that was created for the purpose of protecting assets. In North Carolina, it is a legal entity that can be used to protect assets from creditors. The settlor of the trust, which is usually the creator of the trust, transfers ownership of their assets to the trust, and the assets become the trust’s property. The trustee, who is the person responsible for managing the trust’s funds and assets, then administers the trust according to the instructions in the trust document. The main purpose of a spendthrift trust is to prevent the beneficiary of the trust from using the assets for their own personal gain. The trustee holds onto the assets and cannot release them without the approval of the settlor or court. This prevents the beneficiary from squandering away the assets or using them to pay creditors or any other third party. It also provides a financial cushion for the beneficiary if they find themselves in debt or face lawsuits. Spendthrift trusts are beneficial for both the settlor and beneficiary and are a great way to protect assets in North Carolina. It is important to understand all of the legal aspects of creating a spendthrift trust to ensure that it is set up correctly and legally, and it is also wise to consult a qualified lawyer or accountant for assistance.

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What is a spendthrift trust?

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