What is a spendthrift provision?

A spendthrift provision is a legal agreement within a trust that protects a beneficiary’s inheritance from being misused or squandered. The provision prohibits the beneficiary from mortgaging, selling, transferring, or encumbering the trust assets. It also prevents the beneficiary from voluntarily or involuntarily disposing of the trust assets by means of bankruptcy or legal judgments. In Virginia, spendthrift provisions provide an additional layer of protection for beneficiaries by limiting their access to trust assets. When a trust contains a spendthrift clause, the beneficiary cannot transfer any of the trust assets while they are still in the trust. This ensures that the beneficiary cannot give away or sell the assets without the trustee’s permission. As the trustee, you can also be proactive in protecting the beneficiary’s best interests by limiting the beneficiary’s ability to excessively borrow or spend money from the trust. Spendthrift provisions also allow the trustee to monitor and control how the beneficiary uses the assets within the trust. The trustee is charged with administering the trust, and with protecting the beneficiary’s interest in the trust assets. Trustees are responsible for deciding when and how trust assets should be distributed to the beneficiary. Spendthrift provisions are an important tool for those charged with administering a trust in Virginia. They provide both protection and flexibility to the trust beneficiary, and equally important, they provide comfort to the trustee knowing the assets are being managed responsibly.

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What is a spendthrift provision?

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