Self-Settled Spendthrift Trusts: Balancing Control and Creditor Protection

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Reviewed by Stuart A. Green, JD

Last Updated: Dec 5, 2023

Read Time: 2 mins

Introduction

In the realm of estate planning and asset protection, self-settled spendthrift trusts have emerged as a popular and versatile tool for individuals seeking to safeguard their wealth while retaining a certain level of control over their assets. These trusts offer a unique balance between creditor protection and personal access to the trust’s assets. This article delves into the intricacies of self-settled spendthrift trusts, exploring their key features, benefits, and potential drawbacks.

Understanding Self-Settled Spendthrift Trusts

A self-settled spendthrift trust is a type of irrevocable trust that allows an individual (the grantor) to be both the trust’s creator and a beneficiary. The grantor transfers assets into the trust, effectively removing them from their personal ownership and control. However, the grantor can still enjoy certain benefits by accessing the trust’s income or principal, subject to specific limitations.

Key Features and Benefits

1. Asset Protection: One of the primary objectives of self-settled spendthrift trusts is to protect the grantor’s assets from potential creditors, lawsuits, or financial setbacks. By placing assets within the trust, they become sheltered from personal liabilities.

2. Flexibility: Unlike traditional trusts, self-settled spendthrift trusts offer a degree of flexibility for the grantor. They may retain control over the management of the trust’s investments and even amend certain provisions within the trust under certain circumstances.

3. Creditor Protection: Although self-settled spendthrift trusts can offer creditor protection, this aspect varies significantly depending on the jurisdiction in which the trust is established. Some jurisdictions are more favorable to the grantor, offering robust protection, while others may have more limitations.

4. Estate Tax Planning: These trusts can also serve as valuable tools for estate tax planning, as assets placed in the trust are no longer considered part of the grantor’s taxable estate, potentially reducing estate tax burdens.

5. Privacy: Unlike probate proceedings, which are public, self-settled spendthrift trusts maintain a higher level of privacy since they are generally not subject to probate.

Conclusion

Self-settled spendthrift trusts present an intriguing option for individuals seeking to protect their assets while still benefiting from them. By understanding the benefits of these trusts, individuals can make informed decisions about whether to include them in their estate planning strategies. It is essential to consult with a qualified attorney or financial advisor to navigate the complexities and ensure compliance with applicable laws when considering a self-settled spendthrift trust as part of an overall asset protection plan.

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Client Testimonials

    
 
 
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   Angélique Pfab Green 
 
 
 
 Trustindex verifies that the original source of the review is Google. Stuart Green is incredibly knowledgeable and clearly operates at a very high level. His approach to estate planning and wealth strategy is thoughtful, modern, and well beyond the traditional. You can tell he genuinely cares about helping people protect what they’ve built. Truly impressive work and reputation.
  
 
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   Maria Cardenas Anderson 
 
 
 
 Trustindex verifies that the original source of the review is Google. I had an excellent experience working with Stuart Green on my trust and will documents. From start to finish, he was incredibly responsive, patient, and thorough. He took the time to explain everything clearly, ensuring I fully understood each step of the process. Even after the trust was complete, he guided me on what still needed to be done — something I really appreciated. Stuart’s professionalism and kind demeanor made what could have been an overwhelming experience so much easier. I felt informed and supported every step of the way. I would highly recommend him to anyone looking for a knowledgeable and attentive probate lawyer. Thank you, Stuart!
  
 
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   katelyn rennie 
 
 
 
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   Chris Stinson 
 
 
 
 Trustindex verifies that the original source of the review is Google. Stuart Green is an exceptional estate attorney. He handled my father's living will and then his estate after his passing, as well as helping my mother finalize and complete her estate in conjunction with my father's death. Currently, he is handling the living will and estate planning for me and my wife and our family. I highly recommend him and his integrity of work.
  
 
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   Alejandra 
 
 
 
 Trustindex verifies that the original source of the review is Google. My experience with Stuart Green Law was a 10/10. They were professional and efficient, resolving my case quickly. I highly recommend them!
  
 
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   Joseph Marchetti 
 
 
 
 Trustindex verifies that the original source of the review is Google. Great guy - honest businessman.  Has been very helpful for me in providing feedback and input from a law perspective on employment and legal agreements in my personal and professional life.  Would heartily recommend Stuart to others!
  
 
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   Will Desrochers 
 
 
 
 Trustindex verifies that the original source of the review is Google. I have worked with Mr. Green for awhile now and can't recommend him highly enough. He is professional and and timely with his responses to my questions. I really appreciate how he helps me understand the plan for my estate. I look forward to continuing to work with him.
  
 
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   Chuma 
 
 
 
 Trustindex verifies that the original source of the review is Google. I’ve learned a great deal from Stuart on the foundational aspects of estate planning, legacy planning and asset protection. Having had the privilege  to work alongside Stuart, I can also say that he is a top tier counselor and focused on aligning his client’s personal goals with their long term objectives and wishes.
  
 
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   Nick Delsignore 
 
 
 
 Trustindex verifies that the original source of the review is Google. Incredible person to know and be associated with. Stuart provides excellent services, that is undeniable. However you will be hard pressed to find another attorney with a truer moral compass.