A Refreshing Review of Spendthrift Trusts

The other day, I was holding a can of Spindrift sparkling water—raspberry lime, if you’re curious—and I couldn’t help but read it as "Spendthrift." Chalk it up to the hazards of being a law professor. When your brain is wired for bar prep, even a can of seltzer becomes a lesson in Trusts and Estates.

And that’s the point: The bar exam shows up in everyday life if you know where to look.

What’s a Spendthrift Trust?

A spendthrift trust is a trust designed to protect a beneficiary from their own poor money management—or from creditors eager to swoop in. It contains a clause that keeps the beneficiary from selling or transferring their interest in the trust before it’s actually paid out. Creditors also have to wait until distributions are made before they can attempt to collect.

It’s like putting a lid on your Spindrift can: The fizz is there, but it can’t all escape at once.

How Spendthrift Provisions Work

The main purpose of a spendthrift clause is to keep the trust intact until it’s supposed to be distributed. The settlor (the person creating the trust) can rest easy knowing that their intent is honored: The money is used to support the beneficiary over time rather than being blown all at once.

That said, the protection isn’t absolute. Certain claims—like child support, spousal support, or government obligations—can often pierce the spendthrift shield. And if the person who created the trust is also the beneficiary, creditors can usually get through to the assets anyway. After all, the law isn’t going to let someone protect their own money from their own creditors by hiding it in a trust.

Courts generally uphold spendthrift provisions because they balance two important goals: Protecting the beneficiary and honoring the settlor’s intent. But they also won’t allow them to be used unfairly or against public policy.

Why It Matters for the Bar Exam

Trusts and Estates pop up regularly on the essay portion of the bar exam, and spendthrift clauses are a favorite testing point. They usually appear in fact patterns involving a beneficiary with financial troubles, creditors chasing after trust assets, or disputes over whether a trustee must pay out funds.

One key principle: A spendthrift provision is often considered evidence of a “material purpose” of the trust. That makes it hard for beneficiaries to band together and terminate the trust early, even if they all agree. The presence of the clause signals that the settlor wanted the money to be protected and distributed as planned, not cashed out prematurely.

So the next time you crack open a Spindrift, think: Spendthrift.

One refreshes your thirst. The other refreshes your knowledge of Trusts and Estates.