A spendthrift trust prevents an imprudent or extravagant trust beneficiary from squandering money from his or her trust fund. This is accomplished by distributing money from the trust in small amounts over time or by requiring the person to reach a certain age before he or she can use the trust funds.
A spendthrift trust also prevents creditors of the imprudent or extravagant beneficiary from compelling the trust administrator to pay the debts from the trust fund. Any debts to be paid are paid from the trust distribution after it is made to the beneficiary.
Yes you should. A trust is a complex document giving legal status to your wishes after your death. You would not want to have your extravagant beneficiary or creditors successfully challenge the spendthrift trust and invalidate your wishes because you did not have an experienced spendthrift trust attorney prepare the documents for you.
Your attorney will explain what a spendthrift trust is, how it works, and what it can and cannot do. He or she will ask questions about what you want the spendthrift trust to accomplish and how you want it to work and potentially provide you with recommendations.
Your attorney will craft the spendthrift trust to accurately reflect your wishes and protect it from challenges. For example, if your extravagant beneficiary loves cars and you believe he will waste the trust’s money buying them, your attorney can place a provision in the spendthrift trust that it will not pay for any automotive related purchases of any kind.
Your attorney also can advise you about exceptions. For example, the trust will pay for your extravagant beneficiary’s college education and place upon that certain conditions such as maintaining a certain grade point average and completing the education by a certain date.
Unknowns can also be addressed by your attorney. If your extravagant beneficiary needs an operation, for example, that will be included in the trust. Other contingencies may also be addressed.