KEY TRUST INFORMATION Trust Operation •You may never remove assets from or transfer assets to the Settlor of the Trust after the Creation of the Trust. Continuing the asset protection series of posts, I’ll now turn to spendthrift trusts and discretionary trusts. In this arena, not only is a spendthrift provision like the Ohio version mentioned above important in the trust agreement, but it is also beneficial to structure the sub-trust for a special needs beneficiary as a wholly discretionary trust. Therefore, when a trust includes a spendthrift clause and a discretionary clause, creditors may be lawfully excluded from ever reaching the trust assets. Getting back to the original question; which is better, a Spendthrift Trust/Clause or Discretionary Trust? Spendthrift Versus Discretionary Trust Provisions. The grantor should also name a successor trustee who would take over when the grantor dies. The grantor or settlor is the person who creates the trust and puts assets into it. A discretionary trust, in the trust law of England, Australia, Canada and other common law jurisdictions, is a trust where the beneficiaries and/or their entitlements to the trust fund are not fixed, but are determined by the criteria set out in the trust instrument by the settlor.It is sometimes referred to as a family trust in Australia or New Zealand. Creditor's Claims - Spendthrift and Discretionary Trusts 75-7-501 Rights of beneficiary's creditor or assignee. The grantor can be the trustee of the trust or he or she can name someone else to do the job. The trustee might have to make disbursements in compliance with a trust document that contains spendthrift language. Some trust provisions also provide a sentence or statement about a trustee’s ability to act in their sole discretion with regard to distribution of assets to a beneficiary. Most trusts and Wills contain a clause or paragraph regarding a spendthrift provision. However, spendthrift and/or discretionary trust are susceptible to some creditors’ claims, e.g., alimony or child support. A discretionary trust, in the trust law of England, Australia, Canada and other common law jurisdictions, is a trust where the beneficiaries and/or their entitlements to the trust fund are not fixed, but are determined by the criteria set out in the trust instrument by the settlor.It is sometimes referred to as a family trust in Australia or New Zealand.

Many trusts are closed down after their grantor dies and their assets have been distributed to their beneficiaries, but a spendthrift trust remains up and running. • •All income or losses generated by the Trust should be reported with a Federal Income Tax Return.
Posted on December 22, 2013 by Josh. With a discretionary trust, the trustee has more control over who gets the funds; therefore, discretionary trusts generally offer greater asset protection to beneficiaries. A growing area in which spendthrift trusts are used is in the context of special needs planning.