For our final installment on Testamentary Trusts, we are spotlighting Spendthrift Trusts. Despite the fact that thrifty people are typically good with money, “spendthrifts,” are notoriously bad with money.
A spendthrift trust protects the trust assets from being taken by creditors to satisfy the beneficiary’s debts or spent by the beneficiary themselves. If the goal is simply to protect the trust assets from known creditors or to keep the trust assets separate from any of the beneficiary’s marital assets, it may be fine for the beneficiary to be the trustee.
Trustees have a duty to comply with the terms of the trust inside your Will. If your beneficiary is irresponsible, you can (and probably should) name someone else as trustee of their trust. However, if the beneficiary is their own Trustee, there may not be anyone else ensuring they follow the terms of the Will and the trust assets will potentially be spent in unintended ways.