People who have a relative or beloved someone who has mental or physical disability are worried  on how these beloved someone afflicted with physical and mental disability can manage their finances efficiently and effectively. Financial institutions have proposed a brilliant financial solution to this problem. They are proposing the spendthrift trust. What is a spendthrift trust? It is a kind of trust created by somebody for someone who could barely manage their finances due to physical or mental disability or other reason such as excessive spending. Thus, a spendthrift trust protects the beneficiary from being imprudent, extravagant and lack of ability to plan his financial affairs. For instance, a settler opens a spendthrift trust account for his daughter, a compulsive shopaholic, who spends money imprudently with no concern for the future.

The beneficiary of the special need trust cannot use the property that are included in the spendthrift trust for the purpose of paying his or her financial debt. But, once the beneficiary have endowed all the legal rights to possess the property, the creditors are allow to get the property as a form of payment up to a specific amount , typically  $15,000.00. Furthermore, there are some states which tolerate creditors to obtain the “surplus income.” Surplus income is a residuary income after the basic support and educational payments have been completed. Thus, the excess surplus can be paid to the creditors subject to the judicial determination and court hearing.

The person who wants to open a spendthrift trust account must comply with all the formal and legal requirements mandated by the federal laws and regulations. Moreover, it must also contain the intention of the person who opened or created the spendthrift trust. The spendthrift account also indicates the trustee and the properties that are included in the trust also known as “res.”  Furthermore, the trust administrator may exist for a particular period of time depending upon the prerogative of the settler or may exist for the lifetime of the beneficiary. However, there are few states which do not permit this kind of trust.

Spendthrift trusts are very practical and valuable that provides assistance and financial protection for people with disability.  Moreover, this type of trust gives a security for property which is use for the maintenance of the beneficiary. However, a word of caution spendthrift trusts is not suitable for every estate plan. Hence, seek the advice and expertise of a seasoned estate planning attorney that will determine your specific needs and concerns and arrive to an estate plan that is well-matched to your personal needs. If you looking out for help then financial planning attorneys could serve the best purpose.

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