Estate Planning Attorney in Laguna Hills, CA | Confidential Consultations
Estate Planning Attorney in Laguna Hills, CA | Confidential Consultations
Home » How a Spendthrift Trust Protects Your Child’s Inheritance
Would your child make wise decisions if they inherited $1,000,000 tomorrow?
For many parents, the answer is: Nope. Even responsible children can struggle with sudden wealth. Large inheritances can expose beneficiaries to financial mistakes, unhealthy relationships, lawsuits, divorce, or addiction issues that quickly undo what took decades to build.
As a California estate planning attorney, my role is to help families ensure their legacy helps their children rather than harms them. One of the most effective tools for accomplishing this goal is a spendthrift trust.
A spendthrift trust allows your child to benefit from their inheritance while limiting direct access and control. It provides structure, protection, and long term stability while preserving your intent.
A spendthrift trust is a trust that includes provisions restricting a beneficiary’s ability to control or transfer inherited assets.
These provisions are designed to:
California law recognizes and enforces spendthrift provisions when properly drafted. The legal framework governing trusts can be found in the California Probate Code.
Most California families use a revocable living trust as the foundation of their estate plan.
You can read more about how living trusts work and why they are commonly used here:
https://ocestateplanlawyer.com/living-trust-secure-your-legacy/
While you are alive:
After your death:
This structure allows flexibility during your lifetime while protecting your child later.
Every trust includes three roles:
The person who creates the trust and transfers assets into it.
The person responsible for managing trust assets and following the trust instructions.
The person who benefits from the trust assets.
When you create your living trust, you usually serve in all three roles. After your death, your child becomes the beneficiary, but for spendthrift protection to work, your child should not be the trustee.
Choosing the right trustee is critical. You can explore trustee selection considerations here:
https://ocestateplanlawyer.com/should-your-lawyer-control-your-money-after-you-pass-away/
Leaving assets outright to a child gives them immediate control. Once inherited:
This is especially risky in California, where divorce and litigation exposure are common. Even well meaning children may lack the experience to manage significant wealth responsibly.
This is one reason families often choose trusts over wills.
If a child struggles with money management, a trust limits access while still providing support.
Large inheritances can worsen addiction issues. A spendthrift trust can:
Although inheritances start as separate property in California, they often lose protection when commingled. A spendthrift trust keeps assets outside the beneficiary’s ownership, reducing divorce exposure.
This protection is especially important in blended families.
Assets held in a properly structured spendthrift trust are generally protected from creditors because they are not owned directly by the beneficiary.
For more on how debts interact with inheritances, see:
https://ocestateplanlawyer.com/the-debt-myth/
You decide how and when your child receives benefits.
Examples include:
Such as:
Assets remain in trust for life and are used for the beneficiary’s benefit, often by paying expenses directly rather than distributing cash.
For spendthrift protections to work, the trustee must be independent.
A trustee must:
Trustee options include family members, trusted friends, professional fiduciaries, or bank trust departments.
A spendthrift trust can hold or receive:
Life insurance planning often works hand in hand with trusts.
California presents unique risks:
You can read more about probate delays and costs here:
https://ocestateplanlawyer.com/why-probate-takes-so-long-in-california/
https://ocestateplanlawyer.com/california-probate-costs/
Spendthrift trusts help families avoid these issues while preserving privacy.
https://ocestateplanlawyer.com/living-trust-privacy-in-orange-county/
DIY planning often leads to litigation and probate.
Is a spendthrift trust legal in California?
Yes. California law recognizes spendthrift provisions when drafted properly.
Can my child still benefit from the trust?
Yes. The trust is designed to support the child while protecting the inheritance.
Can I change the trust later?
Yes. A revocable living trust can be amended while you have capacity.
Does a spendthrift trust avoid probate?
Yes, if assets are properly titled in or payable to the trust.
Is this only for wealthy families?
No. Any family with real estate, insurance, or savings can benefit.
An inheritance should strengthen your child’s future, not expose them to unnecessary risk.
A spendthrift trust allows you to leave a legacy that supports, protects, and guides your child long after you are gone. For California families, it is one of the most effective estate planning strategies available.
If you live in California and want to ensure your child’s inheritance is protected the right way, now is the time to act.
Schedule your free 30-minute Strategy Session today or call (949) 377-2996 with Michael Pevney, your trusted Orange County estate planning attorney.
SECURE YOUR LEGACY
With over 18 years of legal experience in Orange County, Michael Pevney focuses on estate planning to help families protect assets, avoid probate, and secure their legacy with confidence.
