What is a spendthrift trust?

A spendthrift trust is a type of trust established in Pennsylvania trusts and estates law to protect the beneficiary’s assets from being used up by creditors. The purpose of a spendthrift trust is to ensure that the beneficiary’s financial interests are protected by limiting the ability of creditors to access the trust assets. In other words, creditors are prohibited from attaching or otherwise reclaiming the beneficiary’s assets from the trust. A spendthrift trust is typically created by a person (known as the settlor) who wants to set aside assets for the benefit of a beneficiary, such as a spouse, child, or other family member. The settlor is the person who chooses to put the assets into the trust and designate a trustee to manage them for the beneficiary’s benefit. The trustee is responsible for ensuring that the assets are managed responsibly and according to the settlor’s wishes. The assets in a spendthrift trust are protected from any creditors of the beneficiary because they are not considered the beneficiary’s property and instead are owned by the trust. As a result, creditors are unable to demand payment from the trust assets for debts owed by the beneficiary. In addition, the settlor may include language in the trust’s agreement which further protects the assets from being accessed by creditors or other claimants. In summary, a spendthrift trust is a type of trust created in Pennsylvania trusts and estates law to protect a beneficiary’s assets from being used up or taken by creditors. The trust assets are managed by a trustee and are not considered the beneficiary’s property, making them unavailable to creditors.

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