|
THE “SELF-SETTLED” SPENDTHRIFT
TRUST
The
law in most states provides that the creditors of a
person who establishes a trust for his/her own benefit
(called the "grantor") can attach the grantor's assets
transferred in trust if the trustee has the authority to
distribute property back to the grantor. This means that
if the grantor of a spendthrift trust is also a
beneficiary, the grantor's creditors can reach his/her
beneficial interest in the trust in satisfaction of the
grantor's debts and obligations. Thus, most states do
not recognize the validity of the so-called
"self-settled" spendthrift trust. This is one of the
reasons why assets in a typical living trust are not
protected from creditors while the grantor is alive.
|
