What is a Spendthrift Trust?

A spendthrift trust is a type of estate planning tool that can be used to financially protect your beneficiaries. Here are the basics of the spendthrift trust and how it works. 

Spendthrift Trust

The spendthrift trust is a type of tool that you can use in order to determine how and when your beneficiaries are going to receive your assets after you die. This type of tool is used when you have a beneficiary that may not be money-wise and may spend money freely. The spendthrift trust will prevent access to all of the money at once. You might set certain conditions and the trust that makes your beneficiary meet certain requirements before they can obtain their inheritance.

Example

For example, let's say that you had a $5 million estate and you leave a young son that is only 15 years old. You do not want to give them access to a large sum of money because they will not know how to handle it. In order to protect them, you might set up the trust so that they only receive small payments to live on until they reach the age of 25. Then they can have the balance of the assets in the trust.

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