What is a spendthrift trust?

A spendthrift trust is an estate planning tool used in California Elder Law to help protect assets from creditors. It is a type of trust agreement that forbids the beneficiary from voluntarily or involuntarily transferring or assigning assets held in the trust. It is named after the old English noun, "spendthrift," which means "one who spends money prodigally or wastefully." In California, a spendthrift trust is an agreement between the grantor (the person who creates the trust) and the beneficiary (the person who will receive the trust fund once it is established). In this agreement, the grantor will assign certain assets to the trust. It is important to note that these assets do not belong to the beneficiary, as the grantor still owns them. The trust includes provisions that make it difficult for the beneficiary to access the assets before their designated time. The beneficiary has no control over the assets in the trust, so the grantor can protect those assets from creditors or other beneficiaries of the trust. This is especially helpful if the beneficiary is irresponsible or likely to be subject to lawsuits or other creditors. In California Elder Law, spendthrift trusts are commonly used to protect assets and ensure they are used as intended by the grantor. They provide a way for grantors to protect their assets while still allowing beneficiaries access to those assets when needed.

Related FAQs

How can I protect my assets from nursing home costs?
How can I ensure that my elderly parent’s wishes are respected?
What types of issues does Elder Law cover?
How can I ensure my wishes are carried out after I am no longer able?
What is elder financial abuse?
What is a Medicaid waiver program?
What is a medical alert system and how does it work?
What is the difference between a trust and a will?
What is the difference between a guardianship and a power of attorney?
How do I plan for a supported living arrangement?

What is a spendthrift trust?

Related FAQs

Related Blog Posts