What is a spendthrift provision?

A spendthrift provision is a feature that can be included in a trust that limits how much money and assets from the trust can be spent, transferred, or borrowed against. It is intended to protect the trust from being used for purposes other than what was intended, or from being squandered away in a way that was not anticipated by the trust document. In New York, a spendthrift provision can be added to a trust to ensure that the assets and funds are used towards the beneficiaries’ benefit, rather than being claimed by their creditors. It also prevents creditors from seizing the trust assets. This type of protection prevents money from being taken by creditors and helps ensure that the trust assets are passed to the intended recipients. Furthermore, a spendthrift provision even protects assets inside the trust from beneficiaries who could be prone to overspending. Rather than leaving the trust assets to chance, the spendthrift provision allows trustees to manage assets and funds according to the trust document, rather than worrying about a beneficiary taking too much of the trust funds in a short period of time that could negatively affect the trust. In New York, the spendthrift provisions can be found in Section 7-1.3 of the Estates, Powers & Trusts Law. It outlines the specific restrictions that must be included in each trust document when creating a spendthrift provision. Overall, a spendthrift provision is a feature that can be added to a trust to ensure that the assets and funds in the trust are used for the intended purpose, rather than being taken by creditors or overspending by beneficiaries. It is an important feature to consider when creating a trust in New York.

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