spendthrift trustn.
Reviewed by Owen Hathaway, AttorneyUpdated June 5, 2026A 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.
A spendthrift trust contains a provision restraining the beneficiary from transferring or assigning their interest and preventing the beneficiary's creditors from reaching trust assets until those assets are actually distributed. It protects an inheritance from a beneficiary's own imprudence and from outside claims.
Spendthrift protection generally applies to trusts created for someone other than the settlor; protection for trusts a person creates for their own benefit (self-settled trusts) is far more limited and depends on specific asset-protection statutes.
Colorado recognizes spendthrift provisions under the Colorado Uniform Trust Code (C.R.S. Title 15, Article 5, Part 5), subject to exceptions for certain claims such as child support. Wyoming's trust code likewise enforces spendthrift clauses with statutory exceptions.
Related terms
- 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.
- special needs trustA trust that holds assets for a person with disabilities without disqualifying them from need-based benefits like Medicaid and SSI.
- self-settled trustA 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.