2016) (overruling the Massachusetts Appeals Court's holding that a husband's beneficial interest in a discretionary
spendthrift trust, subject to an ascertainable standard with an open class of beneficiaries, was too speculative to constitute a property interest and instead was only an expectancy).
These pronouncements indicate that a self-settled
spendthrift trust, when created, could be structured as a completed gift, provided that no income or principal can be transferred to the settlor's creditors or estate.
(27) Beginning with the foundation of a standard
spendthrift trust, these jurisdictions made major changes, including offering settlors the ability to transfer money into a trust, the ability to appoint a trustee who has discretion over how to distribute the income to the beneficiaries, and, in the case of a self-settled trust, the ability to make the settlor a beneficiary.
A
spendthrift trust protects the assets of the trust from the claims of the beneficiaries' creditors.
A special needs trust must be a discretionary,
spendthrift trust where the beneficiary has no control whatever over distributions.
Spendthrift Trust. These trusts are created by one person, most commonly a parent, for the benefit of another person, such as a child.
There is, however, some continuing activity to modify or fine-tune the specifics of
spendthrift trust rules in the various states, although one can hardly say that there is a recognizable direction in this "stirring around."(61) On the other hand, because spendthrift protections do not validly apply to interests retained by settlors,(62) various modern developments in the use and design of trusts(63) have required some elaboration and refinement of rules about when a beneficiary is or may become a settlor.(64)
The author was told the following story by a lawyer: The client came in and asked for a Cook Islands trust for his son, "the bum." As it turned out, all he wanted, or needed, was a domestic
spendthrift trust. But the magazine he read would never have run an article on domestic spendthrift trusts--boring.
The Death of Liability describes the decade-old boom in offshore "asset-protection trusts"--devices sited in offshore havens but widely promoted here as an effective means for Americans to render themselves judgment proof.(18) "Asset-protection trust" is merely a euphemism for "self-settled
spendthrift trust." Self-settled
spendthrift trusts are, in essence, private declarations by property owners that they will retain full use and control of their assets, but that their judgment creditors will not be able to reach them.