Asked by Abigail Rodefer on Jun 06, 2024

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The characteristics of a spendthrift trust include which of the following?

A) Spendthrift provisions are not valid in most states.
B) Trust creditors can never seize income from a spendthrift trust.
C) A settlor may provide, in a spendthrift trust, that the beneficiary cannot, by assignment or otherwise, impair her rights to receive principal or income.
D) All of these.

Spendthrift Trust

A legal arrangement that prevents the beneficiary's creditors from accessing the trust funds, providing long-term financial security for the beneficiary.

Spendthrift Provisions

Clauses in trust agreements that prevent beneficiaries from squandering their inheritances or creditors from claiming the trust assets.

  • Understand the diverse categories of trusts and their unique attributes.
  • Distinguish between revocable and irrevocable trusts.
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AH
Akeil HindsJun 08, 2024
Final Answer :
C
Explanation :
Spendthrift trusts are designed to protect the trust's assets from being claimed by creditors of the beneficiaries and to prevent beneficiaries from squandering their inheritance. A key characteristic of a spendthrift trust is that it contains provisions preventing the beneficiary from transferring (by assignment or otherwise) their rights to future payments of income or principal, thereby protecting the trust's assets from creditors and ensuring the beneficiary's inability to prematurely access or misuse their inheritance.