What it means
A spendthrift provision keeps a trust beneficiary from signing away a trust interest and keeps most creditors from seizing it. Under §736.0502 the clause is valid only if it restrains both voluntary and involuntary transfer — a clause that blocks only one kind protects nothing. The traditional shorthand works: saying an interest is held subject to a spendthrift trust is enough by itself.
While assets stay in the trust, a creditor or assignee cannot reach the interest or an upcoming distribution. The protection ends the moment the beneficiary receives the money. The clause also does not prevent interests from passing through the exercise of a power of appointment.
- Valid only if the provision restrains both voluntary and involuntary transfer of the beneficiary's interest.
- The words "held subject to a spendthrift trust" are sufficient by themselves to create the restraint.
- A creditor or assignee cannot reach the interest or a distribution before the beneficiary receives it.
- Protection stops at distribution — money in the beneficiary's hands is ordinary, reachable money.
- The validity rule applies to instruments executed on or after the trust code's effective date (July 1, 2007); older instruments are governed by prior law.
- A valid spendthrift provision does not block the exercise of a power of appointment, and part V's exceptions (§§736.0503–736.0505) still apply.
How it plays out
Spendthrift language is in nearly every trust we administer, and the question families ask is always the same: is the money safe? Our answer draws the statute's own line — safe while it sits in the trust, ordinary money the day it is distributed. When a beneficiary is mid-divorce or mid-bankruptcy, we look hard at the distribution schedule before anything is paid, because §736.0502's protection cannot be put back once a check clears.
Where this shows up
Pages on this site where § 736.0502 does real work:
Questions people ask
