Spendthrift Trust Definition

Trust benefiting an individual who is financially irresponsible; grantor of the trust may establish limitations on use of money to pay debts, or may provide for direct payment to creditors, completely bypassing the beneficiary. Some states permit a spendthrift trust to state as part of its terms that creditors may not invade the trust to satisfy the debts of the beneficiary.
Webster's New World Law

(law) A trust that is created for the benefit of a person (often because that beneficiary is unable to control spending) that gives an independent trustee full authority to make decisions as to how the trust funds may be spent for the benefit of the beneficiary, thus keeping the funds in the trust beyond the reach of creditors.


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