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 Iowa, 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. Iowa law recognizes the validity of spendthrift provisions in trusts, as outlined in the Iowa Code. 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. This means that creditors generally cannot reach the assets in the trust to satisfy the debts of the beneficiary. However, there are exceptions to this protection, such as claims for child support, alimony, or other specific types of debts as determined by state or federal law. It is important to note that the creation and administration of a spendthrift trust must comply with Iowa's trust laws, and it is advisable to consult with an attorney to ensure that the trust is properly established and operates within the legal framework.