Protecting Trust Property with a Spendthrift Trust in Arizona
Seek reliable guidance from our Phoenix-area legal team
If you want to leave money or other assets to a loved one but are worried that they are financially irresponsible, you might consider setting up a spendthrift trust. This legal device keeps the property from being rapidly depleted by placing strict limits on how much the beneficiary can obtain and on what conditions. At Pennington Law, PLLC, our knowledgeable estate planning attorneys understand the concerns people have about providing for their family members. You can rely on our Phoenix-area legal team for sound advice on whether a spendthrift trust would work for you.
What is a spendthrift trust and when is it typically used?
A trust may be put in place to control the property of spendthrifts — people who are the opposite of thrifty spenders. Spendthrifts may waste money due to their own poor financial judgment or to being influenced or defrauded by others. A spendthrift trust gives the appointed trustee discretion to control disbursements so that trust assets are protected from waste. Trustees have the authority to decide how much money the beneficiary will get, how often and on what conditions. Payments can be made to or in behalf of the beneficiaries, such as to pay rent, tuition or other expenses deemed necessary or reasonable. Assets in the trust are safe from the beneficiary’s creditors because the beneficiary doesn’t control the trust. We can develop a spendthrift trust that tailors the trustee’s discretion in accordance with your wishes.
How much control does a trustee have over a spendthrift trust?
A trustee’s powers can be as extensive or a limited as you wish, depending on your particular concerns about the beneficiary in question. In creating the trust, you can be very specific about its terms, including:
- how often your beneficiary gets payouts
- when and how the trust may be used to pay for specific expenses
- whether there are circumstances in which payments should not be made
The trust can give the trustee the right to consider the beneficiary’s behavior in deciding on disbursements of funds. For example, if the beneficiary begins taking drugs, gambling heavily or otherwise acting in a way that could cause them to spend irresponsibly, the trustee can be authorized to withhold funds. You can also give the trustee power to make decisions for themselves about when and how trust money will be spent.
What is the process for setting up a spendthrift trust?
A spendthrift trust must be carefully drafted so that it is effective and enforceable. Creating the trust is a complex endeavor that should not be attempted without the aid of an experienced estate planning attorney. The process involves naming a trustee, placing assets in a trust account in the trustee’s name and laying down the rules for the trust’s administration.
As the trust creator, you can appoint yourself to act as trustee during your lifetime and name someone to succeed you upon your death. Bear in mind that serving as trustee is a demanding role, requiring hard work and honesty. The trustee can be compensated for his or her services but cannot otherwise use the trust funds for personal purposes.
Our hardworking lawyers can answer all of your questions about spendthrift trusts and counsel you about every facet of setting one up, so that you can relax in knowing that the property you have put into the trust will be responsibly controlled.
Contact an effective Arizona trust attorney for answers to your spendthrift trust questions
At Pennington Law, PLLC, our Phoenix-area legal team assists Arizona residents throughout Sun City West, Surprise and the vicinity in creating spendthrift trusts to safeguard the financial futures of their beneficiaries. To schedule a free consultation, call our firm at 623-208-7867 or contact us online.