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 Arizona, 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. These provisions restrict the beneficiary's ability to assign their interest in the trust to others, whether voluntarily or as collateral for a debt. Additionally, spendthrift provisions protect the trust's assets from being accessed by the beneficiary's creditors. Arizona law recognizes the validity of spendthrift trusts under the Arizona Revised Statutes, specifically ARS § 14-10501, which provides that a spendthrift provision is enforceable to prevent both voluntary and involuntary transfers of a beneficiary's interest. However, there are exceptions where creditors can breach spendthrift protections, such as claims for child support, alimony, or services provided to protect a beneficiary's interest in the trust. An attorney can provide specific guidance on creating a spendthrift trust in Arizona and the extent of its protections.