The Spendthrift Trust PC1355-Print

ESTATE PLANNING

TRUST

The Spendthrift Trust

A spendthrift trust is an irrevocable trust that includes a provision limiting the beneficiary’s access to the funds. Spendthrift trusts are typically established by a grantor who wants to protect the assets left to a beneficiary. They may be concerned the beneficiary does not have the financial acumen to properly manage the money, or they may want to protect the assets from divorce, creditors, or lawsuits. ESTABLISHING THE TRUST

To establish a spendthrift trust, the grantor names a trustee who will have the power to authorize what payments can be made from the trust based on the directions specified in the trust. The trustee plays a key role in the administration of a spendthrift trust. Beneficiaries cannot spend trust assets or control getting a distribution. With a spendthrift trust structure, creditors have no rights to the trust assets while they remain in the trust. This includes present and future creditors. It is also used to guard against monetary judgments that might be attached to the trust at some point in time such as from a future ex-spouse.

BENEFITS OF A SPENDTHRIFT TRUST    THE TRUST CAN PROVIDE A LIFETIME OF INCOME AND FINANCIAL SUPPORT    THE TRUST CAN ALLOW FOR MONEY TO BE DISTRIBUTED AT SPECIFIC INTERVALS OF TIME, SUCH AS WHEN A BENEFICIARY IS 18, 25, AND 40 YEARS OLD    BENEFICIARIES ARE UNABLE TO SELL, ASSIGN, TRANSFER, OR PLEDGE TRUST ASSETS    BECAUSE THE BENEFICIARY DOES NOT HAVE DISCRETION TO ACCESS THE TRUST FUNDS, NEITHER CAN HIS OR HER CREDITORS

GRANTOR

IRREVOCABLE TRUST (TRUSTEE)

SCHOOL AND MACY’S Discretionary payments for expenses, such as school and clothes

BENEFICIARY

CREDITORS Creditors can only reach distributions received by beneficiary

UNAUTHORIZED CREDITORS $10,000

Payments can be denied to unauthorized creditors, such as an ex-spouse

Trustees must exercise prudence and follow trust language when making distributions. If a beneficiary needs funds for a large expense, such as tuition, the trustee may distribute funds to the beneficiary or choose to pay the school directly. The trustee may also veto requested distributions depending on the trust provisions.

Contact a Commerce Trust advisor to learn more about spendthrift trusts and explore the options available to you. 1-855-295-7821 | commercetrustcompany.com

Wealth | Investments | Planning Commerce Trust Company

Commerce Trust Company is a division of Commerce Bank. PC1355

NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE

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