Also known as:spendthrift restraints · spendthrift trust · restraint on alienation
Written by attorneys · grounded in primary & secondary sources — see below
A provision in a trust or donative transfer that prevents a beneficiary from voluntarily assigning an interest or from having the interest reached by creditors before distribution. The language need only indicate that the interest is held subject to a spendthrift trust or employ equivalent words to create the restraint on both voluntary and involuntary transfers.
Sources & Authorities
How it applies
Common Examples
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Creditor Attachment Attempt Blocked
Frank created an irrevocable trust for Bob funded with startup shares. The instrument stated that Bob's interest shall not be anticipated or assigned by him or reached by his creditors. After Bob incurred cryptocurrency debts, Mountain Byte obtained a judgment and sought attachment of future distributions. Because the trust language restrained both voluntary and involuntary transfers, the court denied the attachment order and left future distributions protected until paid to Bob.
Landlord Consent Withheld Unreasonably
MetroHub leased space to Riverline under a clause requiring written consent for assignment. Riverline proposed assigning to ApexTel, a stronger carrier planning identical use. MetroHub refused solely to preserve future bargaining leverage. The court held the refusal unreasonable and ordered the assignment to proceed because the lease did not grant an absolute right to withhold consent.
Select any source to read its text and confirm it supports the definition.
Uniform Acts
Restatements
Casebooks
Hornbooks
Study Supplements
Servitude Restraint Found Unreasonable
Global Arts received a deed containing a covenant limiting future sales of a historic warehouse to arts organizations only. When Global Arts sought to sell to an office developer, neighboring Prime Theatre invoked the covenant. The court weighed the utility of preserving the arts district against the injurious effect on marketability and invalidated the covenant as an unreasonable direct restraint on alienation.
Use Restriction Upheld as Non-Alienation Restraint
Bernice's will devised factory shares to Wesley but directed that income be used only for manufacturing operations. Wesley later sought to sell the shares to a competitor. The court enforced the use limitation because a restraint on the purpose to which property may be put does not constitute a restraint on alienation under the applicable rules.
Landlord Consent Requirement Enforced
Sophie leased property to a tenant under a clause requiring the landlord's written consent to any assignment. The tenant proposed assigning to a financially stronger assignee planning the same use. Sophie refused consent for personal reasons unrelated to the premises. The court upheld the refusal because the lease granted the landlord an absolute right to withhold consent.
Right of First Refusal Upheld
Ulysses's trust granted the fiber-optic LLC a right of first refusal to purchase Maria's interest at no less than seventy percent of the highest third-party offer, exercisable within thirty days. Maria received an outside bid and the LLC timely matched the price formula. The court enforced the right because the price and time terms were commercially reasonable and therefore did not constitute a restraint on alienation.
Common questions
Frequently Asked
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What language is sufficient to create a valid spendthrift provision?+
Words stating that the beneficiary's interest shall not be anticipated or assigned or reached by creditors, or that the interest is held subject to a spendthrift trust, satisfy the requirement. The statute recognizes that words of similar import are enough to restrain both voluntary and involuntary transfers.
Supporting sources
May a creditor reach trust distributions before the beneficiary receives them?+
No. A valid spendthrift provision prevents a creditor from reaching the interest or any distribution by the trustee before actual receipt by the beneficiary. Once cash is paid to the beneficiary, ordinary creditor remedies may apply to those funds.
Supporting sources
Is an attempted assignment by the beneficiary effective under a spendthrift provision?+
No. The beneficiary may not transfer the interest in violation of a valid spendthrift provision. Any pledge or assignment of future distributions is therefore ineffective and the trustee must disregard it.
Supporting sources
520 U.S. 833 (1997)Family Law
…see Marriage of Campa, supra , at 124, 152 Cal. Rptr., at 367-368, and the basic principle that a beneficiary's interest in a spendthrift trust, despite otherwise applicable protections, can be reached in the context of divorce and separation. See E. Griswold, Spendthrift Trusts 389-391 (2d ed. 1947) (summarizing state case law);…