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 New Mexico, a spendthrift trust is a legal tool that allows a grantor to place assets in a trust with specific provisions that prevent the beneficiary from squandering the trust's assets. New Mexico statutes recognize the validity of spendthrift provisions in trusts. These provisions restrict the beneficiary's ability to transfer their interest in the trust, whether voluntarily or involuntarily, and protect the trust's assets from the claims of the beneficiary's creditors. Under New Mexico law, a creditor generally cannot reach the assets in a spendthrift trust to satisfy the debts of the beneficiary, except in certain circumstances such as claims for child support, alimony, or services provided to protect the beneficiary's interest in the trust. It is important for individuals considering setting up a spendthrift trust in New Mexico to consult with an attorney to ensure that the trust is properly established and to understand the specific legal requirements and limitations of such trusts under state law.