What is a spendthrift trust?
A spendthrift trust is a type of trust set up to benefit an individual or group of people. It is primarily used in the area of inheritance law and is particularly popular in Massachusetts. A spendthrift trust is a legal arrangement in which the trustor (the grantor) gives money, assets, or property to a trustee who holds the money or assets on behalf of the beneficiary. The trustee is responsible for managing the trust and distributing the income or assets according to the instructions of the grantor. In the area of inheritance law, a spendthrift trust is often created to protect the beneficiary’s inheritance from being taken away or seized by creditors. This is done by placing the beneficiary’s assets in the trust, which are often managed by a third party. The trust can also be used to ensure that the beneficiary receives the assets after the grantor’s death, without delay or risk of them being taken by creditors. Generally, the terms of a spendthrift trust are outlined in the trust instrument. It is important to understand that in Massachusetts, spendthrift trusts are strictly governed by law and must be set up correctly. If not, they may be deemed invalid, leaving the beneficiary without protection of the assets.
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