A spendthrift trust is a trust in which the person who makes the trust and places property or assets in it (the grantor, settlor, or trustor) includes a provision that prohibits the beneficiary’s interest in the trust from being assigned to another person or entity—whether as a gift or as collateral for a loan or debt—and prevents a creditor from reaching or attaching the beneficiary’s interest in the trust.

A spendthrift is a person who spends money wastefully or foolishly and a spendthrift provision in a trust (a spendthrift trust) is designed to preserve the trust’s assets and protect the beneficiary from the beneficiary’s spendthrift ways.

In Illinois, a spendthrift trust is a legal tool used to protect a beneficiary's interest in a trust from creditors and from the beneficiary's own potentially imprudent spending. Under Illinois law, specifically the Illinois Trusts and Trustees Act (760 ILCS 5/1 et seq.), spendthrift provisions are recognized and enforceable. These provisions prevent the beneficiary from transferring their interest in the trust, either voluntarily or involuntarily, to satisfy personal debts or obligations. This means that creditors generally cannot reach the assets in a spendthrift trust to satisfy the debts of the beneficiary. However, there are exceptions to this protection, such as claims for child support, alimony, or services provided to protect the beneficiary's interest in the trust. It is important for the trust to be properly drafted to ensure that the spendthrift provisions are effective. An attorney can provide guidance on the creation of a spendthrift trust and the specific protections it offers under Illinois law.