What is a spendthrift provision?

A spendthrift provision is a feature in a trust or estate document that protects trust assets from being taken by an individual’s creditors. It prevents the beneficiary of the trust from using trust assets to pay debts. Spendthrift provisions are legal tools widely used by Indiana trust creators to ensure that the trust and its assets are maintained for the intended beneficiary, despite any financial problems the beneficiary may face. In Indiana, spendthrift provisions are not an automatic feature of any trust or estate document. If a provision is not expressly included in the document, creditors may be able to access the trust assets and seize them to pay debts owed by the beneficiary. Spendthrift provisions also limit the beneficiary’s ability to transfer his or her interest in the trust to another person. They require that trust payments are made directly to the beneficiary, and the beneficiary is not be able to assign or transfer his or her right to receive payments. By including a spendthrift provision, Indiana trust creators can rest assured that their trust assets will be protected and maintained for the intended beneficiary. This gives beneficiaries the opportunity to remain financially independent and maintain their trust assets regardless of their financial situation.

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