How Does a Spendthrift Trust Differ from an Asset Protection Trust?

Spendthrift trusts include similar protections to an asset protection trust and are more widely respected in other states, but they also come with their own rules and requirements.

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My clients often want to protect their legacy from their own children’s poor planning or misfortune. A trust offers protections many beneficiaries cannot obtain for themselves from creditor claims, untutored investment choices, overspending and unnecessary taxation. These protections, especially from the beneficiary’s own extravagance, fuel the greatest interest in asset protection provisions.

Black’s Law Dictionary defines a “spendthrift” as: “One who spends money profusely and improvidently; a prodigal; one who lavishes or wastes his estate.” A “spendthrift trust” is: “A trust created to provide a fund for the maintenance of a beneficiary and at the same time to secure the fund against his improvidence or incapacity … and places it beyond his creditor’s reach.”

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Timothy Barrett, Trust Counsel
Senior Vice President, Argent Trust Company

Timothy Barrett is a Senior Vice President and Trust Counsel with Argent Trust Company. Timothy is a graduate of the Louis D. Brandeis School of Law, past Officer of the Metro Louisville Estate Planning Council and the Estate Planning Council of Southern Indiana, Member of the Louisville, Kentucky, and Indiana Bar Associations, and the University of Kentucky Estate Planning Institute Committee.