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Spendthrift trust

Definition

A trust that protects the assets of the trust from mismanagement by the beneficiary or creditors of the beneficiary through a trust provision that places a restraint on voluntary and involuntary transfers of the beneficiary’s future interest in the trust income and assets, unless the beneficiary is also the settlor. A discretionary trust that gives the trustee full discretion in distributing the assets, such that the beneficiary has no interest in the assets or income until the trustee decides to distribute them may also be broadly defined as a spendthrift trust.

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