January 27, 2026
Parents work hard to build a legacy that will provide for their children long after they are gone. However, leaving a large sum of money or property directly to a child or other heir can sometimes create more problems than it solves. Creditors, consumer debt, divorce, bankruptcy and unforeseen legal liabilities, are some events and situations that can cause an unprotected inheritance to disappear quickly.
In Wisconsin, a Spendthrift Trust is one of the most effective ways to ensure that your hard-earned assets stay in your family and are used for your family’s long-term well-being.
Give Yourself Peace of Mind
A properly crafted estate plan can give you peace of mind, knowing your assets and family are well protected. Our estate planning lawyers will help you get there.
What is a Spendthrift Trust?
A Spendthrift Trust is a legal arrangement where a third party (the Trustee) manages the inheritance for your child or other beneficiary. A Spendthrift Trust includes a specific provision that restricts the beneficiary’s ability to transfer their interest in the trust and prevents creditors from reaching the trust’s assets.
A Spendthrift Trust Offers Key Benefits for Your Heirs
1. Shielding Assets from Creditors
Without a trust, an inheritance is considered personal property. If your child has credit card debt, medical bills, or a business lawsuit, creditors can seize those funds. With a Spendthrift Trust, the assets belong to the trust, not the child. Because the child doesn’t “own” the money, most creditors cannot legally force the Trustee to pay out funds to satisfy debts.
2. Divorce Protection
In Wisconsin, inheritances are often considered individual property, but they can easily become “marital property” if they are commingled (for example, if your child puts the money into a joint bank account with a spouse). A Spendthrift Trust keeps the inheritance separate. In the event of a divorce, the trust assets are generally protected from being split as part of a marital settlement.
3. Protection from Poor Financial Decisions
Sometimes the “risk” is not an outside creditor, but the beneficiary’s own spending habits. Whether it’s a struggle with addiction, a lack of financial maturity, or being influenced by “fair-weather friends,” a Spendthrift Trust allows you to:
- Stagger distributions (e.g., 10% at age 25, 20% at age 30).
- Limit funds to specific uses like education, healthcare, or a first home down payment.
- Appoint a Professional Trustee to manage investments and tax filings.
Why the “Spendthrift Clause” Matters in Wisconsin
Wisconsin Statutes (Chapter 701) recognize the validity of spendthrift provisions. However, these protections are not “one-size-fits-all.” To be effective, the trust must be drafted with specific language that clearly states the beneficiary cannot alienate (give away or sell) their interest in the trust.
This type of planning is not just for the wealthy. It is for any parent who wants to ensure that their child’s inheritance is protected rather than a target for litigation or a source of conflict.
Take the Next Step
Contact our firm to see how a Spendthrift Trust could be included in your estate plan to protect your family’s assets.