Spendthrift Exceptions

Spendthrift trusts are designed to protect a beneficiary's interest from creditors, but there are exceptions. Specifically, spousal and child support claimants, certain government claims, and judgment creditors can access a portion of the beneficiary's distributions, particularly for support and education needs.

John is the beneficiary of a spendthrift trust that provides him with $1,000 per month. He owes $300 in child support and $200 in student loans. The court allows the child support claimant to access the $300, and since the total distribution is $1,000, the creditor can also reach $250 of the remaining amount for the student loan, leaving John with $450.

Spendthrifts can be reached for support, but not for luxury!

Exams often present scenarios where students must distinguish between allowable claims and those that cannot access a spendthrift trust, leading to confusion about what constitutes support.

Questions typically involve a fact pattern where a beneficiary faces multiple claims, testing the student's ability to identify which claims can penetrate the spendthrift protection.