Do you want to protect your assets and ensure your loved ones are handling your money responsibly? A spendthrift trust is a great way to do just that. This type of trust can help you provide financial security and ensure your money goes to the right places.
However, you can only reap the benefits of a spendthrift trust if you understand what it is and how it works.
What is a spendthrift trust?
A spendthrift trust is a fiduciary agreement that limits the beneficiary’s access to the money you have set aside. You can establish payment terms so that your beneficiary only gets a certain amount of money at a given time, and you can also determine what expenses the money should cover. Not only can these provisions help keep your loved one from wasting money, but they can also protect the assets from creditors.
Who manages a spendthrift trust?
You can manage the trust as long as you are alive. Another person can become the trustee after you die so that the terms stay in place. If you choose a friend or family member to take your place, make sure that you have a good relationship with them and that they are reliable. Open communication can help you avoid issues down the road.
Trusts can do more harm than good when people mishandle them. Also, once a creditor decides to snatch the assets, the trust’s original purpose goes down the drain. This is why a spendthrift trust is worth considering. It can give you peace of mind while protecting those you love.