Can a Revocable Living Trust Include a Spendthrift Provision

Many Connecticut residents who are thinking about estate planning will want to consider a revocable living trust. Unlike different types of irrevocable trusts, a revocable living trust is a type of trust that still allows the settlor — the person who makes the trust — to maintain control over it during their lifetime. Accordingly, the settlor can revise or amend the trust as they wish, and they can also cancel the trust altogether if they choose to do so. Once the settlor dies, then the trust becomes irrevocable and the terms set by the settlor for beneficiary distributions apply. For Canton-area residents who are primarily considering a trust to avoid probate, a revocable living trust is often the best option. However, you may be wondering if this type of trust allows you to account for a beneficiary who may not be able to handle the money reasonably, or may ultimately owe money to creditors.

For those types of beneficiaries, a spendthrift clause is usually the answer. Can a revocable living trust include a spendthrift clause or spendthrift provision? In short, yes. Our Connecticut trusts attorney can explain in more detail.

Revocable Living Trusts in Connecticut Can Include Spendthrift Provisions

If you make a revocable living trust in Connecticut, it can include a spendthrift clause or provision.

A spendthrift clause creates a “spendthrift trust” for particular assets, and it controls how assets are distributed to a particular beneficiary, and it also prevents assets for that named beneficiary held in the trust to be reached by creditors. This type of clause is typically used if you have a beneficiary for whom you want to provide, but you worry they will spend the money too quickly or unwisely, or you have concerns about them owing creditors and creditors being able to reach the assets held in the trust. A spendthrift clause can prevent those things from occurring.

How a Spendthrift Clause in a Revocable Living Trust Works

If you are planning to include a spendthrift clause in your revocable living trust in order to ultimately establish a spendthrift trust, it is essential to understand how this will work.

The spendthrift clause will not protect any assets held in the trust while you are alive. Rather, the clause will essentially take effect, resulting in the particular assets being held subject to a spendthrift trust, upon your death.

Contact a Canton Trusts Attorney for Assistance with a Spendthrift Clause in Your Revocable Living Trust

If you are planning to create a revocable living trust in order to maintain control of your assets during your lifetime while also ensuring that your assets can go directly to your beneficiaries upon your death without having to go through probate, an experienced Canton trusts lawyer at the Law Office of Brian S. Karpe can assist you with this process. As we discussed above, many individuals who want to establish a revocable living trust have questions about the types of clauses or provisions that can go into a revocable living trust, including the possibility of a spendthrift clause or provision. Like we explained, you can certainly ensure that any spendthrift beneficiaries will not have assets held in the trust subject to creditors, and you can determine how and when distributions go to those beneficiaries. Contact our firm today for assistance with your revocable living trust and any other estate planning matters in Connecticut.

Sources:

cga.ct.gov/2023/pub/title_45a.htm

cga.ct.gov/2005/ba/2005SB-01264-R000613-BA.htm