At times, a person may want to leave a trust for the benefit of an intended beneficiary who, for whatever reason, is unable to control his or her own spending. In those cases, the person creating the trust may do so under the law by establishing a spendthrift trust.
With spendthrift trusts, a trustee will make the decisions regarding how money is spent for the benefit of the beneficiary, leaving the beneficiary with little control over the assets or income contained within it. These trusts may be useful in preventing creditors the ability to access the trust’s assets or income prior to any distributions being made.
Nevada law provides that the grantor or settlor of the trust may set such a trust up if it is for the benefit of a person other than the grantor. Furthermore, it may be set up for the benefit of the grantor themselves if the spendthrift trust is irrevocable and is not set up in order to defraud known creditors. Even in the event that the grantor retains the ability to prevent a distribution from the trust account, it may still be allowable as a valid spendthrift trust.
Spendthrift trusts may be a good choice if person wishes to benefit another person who is unable to make financial decisions for themselves. By setting up a spendthrift trust, the person may still be able to have expenses paid on his or her behalf without wasting the benefits that they are eligible to receive. Others may find it beneficial in the event they feel the need to protect their assets from potential future civil lawsuits. In either case, discussing the option with an estate planning attorney may be a good idea. By correctly setting up such a trust, people may be able to protect their assets as well as the people for whom the assets are intended.