Some trust beneficiaries in Massachusetts are capable of responsibly handling trust assets. However, others are a bit more reckless with their spending. For times when a trust creator (grantor) wants to protect intended heirs from themselves, one option is what's termed a spendthrift trust.
A spendthrift trust is an estate planning tool that's overseen by a trustee. This can be a specific individual or a corporate trustee. The trustee's role is to control disbursements from the assets in a trust. An asset management business can also serve as a registered investment advisor to invest money that's in the trust. The beneficiary would not be able to access any of the trust's money until it's time for them to receive distributions. The trustee would also have the discretion to determine which payments are necessary based on the terms of the trust agreement.
A spendthrift trust also includes unique creditor protections. For example, if a beneficiary wished to purchase a home, they would only be able to use their distribution amount for collateral. The principal of the trust could not be used for this purpose. What this does is protect the principal so it can stay in place and continue to generate interest and other additional assets for many years. The main limitation with a spendthrift trust is that a grantor is typically not allowed to name themselves as a beneficiary to enjoy added creditor protection; although, there are some exceptions.
The process of creating a spendthrift trust is the same as what's normally done when establishing any type of trust. The only difference is that a spendthrift provision is included. An estate planning attorney can ensure that all required trust documents are properly prepared so the intended terms are clear. A lawyer can also help a grantor make appropriate adjustments with beneficiary designations if circumstances or wishes change.