As you age, it's only natural to think about the future. You may worry about how your heirs will manage once you're gone, and it's natural to have some concerns about what will happen to the inheritance you leave behind. 

A so-called "spendthrift" trust offers a way to shield your loved ones from financial disasters that could cause their inheritance to vanish.

What's a Spendthrift Trust?

A spendthrift trust is any trust that is designed to limit a beneficiary's access to the principal of the funds and prevent creditors from laying claim to the balance. When you die, your assets become the property of the trust (not your heirs). Those assets are then managed and controlled by a trustee and doled out according to whatever rules you established when the trust was created.

When Is a Spendthrift Trust Useful?

There are numerous reasons to consider this kind of trust. For example:

• One of your heirs is very young: It takes time to develop financial savvy and the maturity to distinguish between "needs" and "wants." If you're not convinced an heir is responsible enough to handle their own money, a spendthrift trust is appropriate.
• You don't think your heirs can handle that much money at once: People can make bad decisions with their money when they suddenly have a lot of it. If you want to make sure the assets are properly invested, it may be better to have a trustee in charge.
• You worry about a possible divorce:  If one of your heirs gets a divorce, it's very possible that some of their inheritance could end up lost to the split. A trust of this nature will make sure that the money stays where it will benefit your family.
• One of your heirs has an addiction: Whether it's gambling, drugs, or something else, you don't want their inheritance to put them in danger. A trustee can make sure that their bills are paid but that the money doesn't feed their addiction.
• One of your heirs has a lot of debts: If you don't want all your hard-earned assets to be grabbed up by an heir's creditors, a trust is the best protection you can have.

Remember that setting up a spendthrift trust isn't punitive toward your heirs. In fact, it's a loving act that will make sure that they have the full benefit of their inheritance in the future. A trust attorney can help you explore this option and others as you make your estate plans.

Contact a local trust attorney to learn more.