Protecting Your Legacy with a Spendthrift Trust

Protecting Your Legacy with a Spendthrift Trust

For many families, building wealth is only half the battle—the real challenge is ensuring it benefits future generations responsibly. That’s where a Spendthrift Trust comes in. This powerful estate planning tool helps protect your assets from being misused, claimed by creditors, or lost through divorce.

What Is a Spendthrift Trust?

A Spendthrift Trust is an irrevocable trust that restricts a beneficiary’s direct access to inherited assets. It includes a “spendthrift clause,” which legally prevents the beneficiary from selling or pledging their interest in the trust—and protects the trust’s assets from creditors or legal claims until distributions are made.

Why Use a Spendthrift Trust?

• Protect Beneficiaries from Themselves
  If a beneficiary is financially inexperienced, impulsive, or struggling with addiction, this trust structure ensures they receive support without having unrestricted access to a lump sum.
• Shield Wealth from Divorce and Lawsuits
  Because the trust—not the beneficiary—owns the assets, those funds are often shielded from creditors, lawsuits, and ex-spouses.
• Preserve Wealth Across Generations
  The trust can distribute assets over time or upon life milestones—ensuring longevity and intent for your legacy.

Did You Know? 60% of inherited wealth is lost by the second generation, and 90% by the third (NASDAQ). A spendthrift trust helps reverse that trend.

How It Works

• The grantor sets up and funds the trust
• A trustee (either an individual or professional fiduciary) manages the assets
• The beneficiary receives income or principal according to terms you define
• Creditors cannot touch the trust until funds are distributed

Who Should Consider One?

• Parents of young adults or financially irresponsible beneficiaries
• Business owners or professionals in high-litigation fields
• Families with complex dynamics (e.g. blended families)
• Anyone aiming to protect assets from external threats

Want Further Guidance on Spendthrift Trusts?

At Strategic Wealth Partners, we help clients build estate plans to safeguard their assets. Whether you’re building your estate plan from the ground up or looking to refine an existing plan, we’re here to help.

Book a virtual meeting with one of our advisors using the link below — and let’s explore how your estate is positioned for what’s ahead.

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