self-settled trustn.
Reviewed by Owen Hathaway, AttorneyUpdated June 9, 2026A trust the creator sets up for their own benefit. In most states this offers little protection from the creator's creditors; a few states allow protective versions.
A self-settled trust is one in which the settlor is also a beneficiary. Under traditional law, a settlor cannot shield assets from their own creditors by placing them in a trust for their own benefit, so spendthrift protection generally fails for self-settled trusts.
As of 2026, 21 states have enacted exceptions, such as domestic asset protection trust or qualified spendthrift trust statutes, that permit limited self-settled protection if statutory conditions are met.
Colorado follows the traditional rule and does not permit self-settled spendthrift protection, so a self-settled trust generally will not shield a Colorado resident's assets from their own creditors. Wyoming, by statute, allows qualified self-settled spendthrift trusts (Wyo. Stat. Title 4, Ch. 10).
Related terms
- domestic asset protection trustA self-settled irrevocable trust allowed in certain states that can shield the person who created it from their own future creditors, something most states, including Colorado, don't permit.
- Wyoming asset protection trustWyoming's version of a self-settled asset protection trust, allowed under state law to protect the creator's own assets from future creditors.
- spendthrift trustA trust with a clause that keeps a beneficiary from giving away or borrowing against their interest and blocks the beneficiary's creditors from reaching it before distribution.
- irrevocable trustA trust that generally cannot be changed or revoked after it's created. Giving up control is the price for benefits like asset protection and tax planning.