Also known as: spendthrift limitations · spendthrift clause · spendthrift provision
Written by attorneys · grounded in primary & secondary sources — see below
A term of a trust that restrains both voluntary and involuntary transfer of a beneficiary's interest.
Sebastian Santos created a trust holding his business interests and included a clause barring any beneficiary from assigning rights or allowing creditors to seize them. When a judgment creditor attempted to attach future distributions, the clause prevented both the assignment and the involuntary reach. The court upheld the restraint because it blocked transfers in either direction.
Sean Steele held a trust interest without any clause limiting transfers. His judgment creditor obtained a court order attaching present and future distributions. The attachment succeeded because no restraint applied to the beneficiary's interest.
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Spencer Silver's trust contained language that only attempted to block voluntary assignments. A creditor reached the interest through attachment because the clause failed to restrain involuntary transfers as well. The court treated the provision as invalid under the dual-restraint requirement.
Stephen Shaw was the beneficiary of a trust giving the trustee sole discretion over distributions, and the instrument contained a spendthrift limitation. A creditor sought to compel payment of income, but the court refused because the trustee's discretion prevented any enforceable right to distributions.
Steven Silva's spouse died and left an interest in undistributed pension benefits subject to a restraint on alienation. The surviving spouse's creditors could not reach the benefits because federal law treated the restraint as effective against both voluntary and involuntary transfers.
No. During the settlor's lifetime, property in a revocable trust remains reachable by the settlor's creditors regardless of any spendthrift limitation in the instrument.
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A spendthrift limitation is valid only when it restrains both voluntary and involuntary transfers of the beneficiary's interest. A clause that restrains only one type of transfer fails and leaves the interest exposed to creditors.
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No. Even without a spendthrift limitation, a creditor cannot force a trustee to make a discretionary distribution, and the presence of the limitation reinforces that protection.
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No. A spendthrift limitation remains unenforceable against claims by the state or the United States to the extent a statute or federal law so provides.
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A creditor or assignee may reach a mandatory distribution of income or principal if the trustee has not made the distribution within a reasonable time after the designated date, even if a spendthrift limitation exists.
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…logic would even permit a spouse to transfer an interest in a pension plan to creditors, a result incompatible with a spendthrift provision such as § 1056(d)(1). Community property laws have, in the past, been preempted in order to ensure the implementation of a federal statutory scheme. See, e. g. , McCune v. Essig , 199 U.…