What a Spendthrift Trust Entails


A spendthrift trust is something that can provide relief to a loved one for the long period and relieve stress. When it comes to your retirement services, one of the things that you shouldn’t underestimate is the benefits of protecting your financial position, not only for you but for your would-be heirs as well. If you’re ready to designate amounts to leave to your children upon your death, but you’re concerned that your children lack proper money management and might spend that money impulsively, you might want to consider a spendthrift provision or trust.

Spendthrift Trust

It is an ideal way to ensure responsible, reliable money management for your intended beneficiary.

What Is a Spendthrift Trust?

A spendthrift provision allows you to designate an inheritance for a child or other individual without giving them full access to that inheritance all at once. Instead, you appoint a trustee for each trust to manage the funds and distribute them in the beneficiary’s best interest. It prevents the beneficiary from spending all the money impulsively, ensuring they have the financial support you intended from the funds designated for them.

How Would You Establish a Spendthrift Provision?

To establish a spendthrift trust, you need to work with an estate lawyer to designate the trusts, their balances, and the applicable provisions. For example, you might require that the beneficiaries reach a certain age before disbursements begin. Also, you might need a certain amount for college. You could also set the trust up to distribute the payments at different life stages, such as high school or college graduation, marriage, the purchase of a home, the birth of a child, or even just changing jobs. You might also require that a percentage of the trust go to retirement services investment.

What Are the Benefits of a Spendthrift Provision?

While the most common reason to consider a spendthrift provision is because of impulsive behavior or immaturity of the beneficiary, that’s not the only reason. A spendthrift provision can also help protect an inheritance against creditor actions, potential fraud, and more. Some people watch the obituaries and the funeral announcements to identify targets for fraud, convincing a beneficiary to turn over their entire inheritance for some scheme, leaving them penniless. You can avoid your loved ones becoming targets for something like this by regulating their access to funds with a spendthrift provision.

The right retirement services plan can leave you with a significant inheritance for your loved ones after your death. Make sure that inheritance benefits them the way you hoped by establishing a spendthrift provision to protect that money from mismanagement, impulsive activity, creditors, and even thieves. The more proactive you are about that protection now, your loved ones will be safer when they receive that inheritance.

About The Hilb Group

Deciding what coverage you need and what limits and deductibles make the most sense can be tricky. Founded in 2009, the Hilb Group has been helping clients to make sense of their options and make the smartest choices for their circumstances. Whether you need Warehouse Insurance or any other type of business or personal coverage, we encourage you to contact our friendly, experienced, and capable team today. Call us at (800) 776-3078 for a consultation.