What is a spendthrift trust clause?
A spendthrift trust clause is an addendum to a trust document that helps protect the beneficiary’s assets from creditors and other parties. It is a form of asset protection in which the assets included in a trust are not accessible to creditors, while still being available to the beneficiary. In Washington, a spendthrift trust clause is included in all trusts that are set up in the state, unless otherwise specified. This clause prevents creditors from seizing the assets of the beneficiary in the case of a debt, lawsuit, or other financial liability. The spendthrift trust clause is set up in two ways: first, by designating a trustee to make decisions concerning the trust assets and then, by prohibiting the beneficiary from selling, transferring, or assigning the trust property. In addition, the beneficiary is not allowed to pledge the trust assets as collateral for a loan or use them as security for any other debt. This means that creditors cannot come after the trust property to recover debts. The purpose of the spendthrift trust clause is to ensure that the trust assets stay intact and are passed from one generation to the next, without any interference from creditors or other parties. This clause is an important part of inheritance law in Washington and helps protect the assets of beneficiaries.
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