When clients sit down with me to plan a trust, the conversation almost always comes back to one core question: “How do I make sure this money actually helps the people I love, instead of hurting them?” It is a question born of love, not distrust. You want your gift to be a blessing — not a burden, not a target, and not a source of conflict.
Most people have a story of someone who inherited something and squandered it. One of the most well known and loved parables of Jesus is of the Prodigal Son, the classic example.
One of the most powerful, and most underused, tools for accomplishing that goal is the spendthrift clause.
The Basic Idea
A spendthrift clause (sometimes called a spendthrift provision) is language written into a trust that does two things at once. First, it prevents a beneficiary from voluntarily selling, assigning, or pledging their future interest in the trust before they actually receive a distribution. Second, and just as importantly, it prevents a beneficiary’s creditors from reaching into the trust to seize that interest before the money is paid out. Ohio law is explicit on this point: a spendthrift provision is only valid if it restrains both the voluntary and involuntary transfer of a beneficiary’s interest, or restrains involuntary transfer while allowing voluntary transfer only with a trustee’s consent (Ohio Revised Code § 5805.01).
In plain terms, until the trustee actually cuts a check or hands over property to the beneficiary, that money legally belongs to the trust — not to the beneficiary, and not to anyone the beneficiary owes money to.
Why This Matters for Your Goals as the Grantor
As the person creating the trust (the “grantor” or “settlor”), you are not just moving assets from one column to another. You are trying to accomplish something deeply personal: you want your children, grandchildren, or other loved ones to actually benefit from what you worked a lifetime to build. A spendthrift clause protects that vision in several concrete ways.
It shields the gift from creditors. Life happens. A beneficiary might face a lawsuit, a business failure, or unexpected debt years after you are gone. Under Ohio’s Trust Code, a creditor or assignee of a beneficiary generally cannot reach the beneficiary’s trust interest, or a distribution before the beneficiary actually receives it, so long as a valid spendthrift provision is in place (Ohio Revised Code § 5805.01(C)). Without that language, a creditor could potentially attach future distributions and take the inheritance you intended for your family before your loved one ever sees a dime of it.
It protects against poor decision-making and undue influence. Not every beneficiary is a sophisticated money manager, and not every beneficiary is immune to pressure from a persuasive friend, a struggling business partner, or a manipulative spouse. Addiction issues can cloud a beneficiaries decision making until they get clean. Because a spendthrift clause prevents the beneficiary from assigning or borrowing against their future interest, it removes the temptation — and the legal mechanism — for someone to talk your beneficiary into signing away their inheritance for a quick loan or a bad investment.
It preserves your intent through a divorce. One of the most common reasons I recommend a spendthrift clause is divorce protection. Ohio courts have generally recognized that a spendthrift provision is enforceable against a beneficiary’s former spouse (Ohio Revised Code § 5805.02(C)), which helps keep inherited assets separate from marital property disputes rather than becoming a bargaining chip in a settlement. Spendthrift provisions along with prenuptial agreements are important tools. No one begins with the idea that a divorce will happen, but life happens and an inheritance can be another stumbling block in the relationship.
It gives the trustee room to act in the beneficiary’s true best interest. Because the assets stay inside the trust structure rather than becoming immediately reachable, the trustee can distribute funds according to the schedule and purposes you set — for education, for a first home, for health needs — rather than the assets being scooped up all at once by a claim you never anticipated.
The Limits You Should Know
A spendthrift clause is strong, but it is not absolute, and I always tell clients the truth about its boundaries rather than overselling it. Ohio law carves out specific exceptions. A spendthrift provision generally cannot be used to defeat a claim brought by a beneficiary’s child or spouse for court-ordered support, at least where distributions could be made for the beneficiary’s support, nor can it be used to defeat certain claims by the State of Ohio or the federal government (Ohio Revised Code § 5805.02(B)). If the trust is set up as a wholly discretionary trust, Ohio law provides an additional layer of protection — creditors generally cannot compel distributions or reach the beneficiary’s interest at all, spendthrift language or not (Ohio Revised Code § 5805.03).
For clients with heightened creditor-protection concerns — business owners, professionals in high-liability fields, or those simply wanting the strongest asset protection available under Ohio law — we can also discuss Ohio’s legacy trust statute, which offers additional statutory protections for self-settled trusts (Ohio Revised Code § 5816.03).
Making Your Gift a Blessing, Not a Liability
At the end of the day, estate planning is about more than paperwork — it is about making sure the people you love actually receive the benefit of what you leave them, on the terms and timeline that reflect your values. A well-drafted spendthrift clause is one of the simplest, most effective tools we have to keep your gift protected, keep your intent intact, and keep your family’s inheritance a source of security rather than stress. Let’s talk about it.
If you are considering a trust, or want to review whether your existing trust includes strong spendthrift protection, I welcome the conversation. You can reach my office at (937) 402-2348 or jim@southwestohiolaw.com.
This article is provided for general informational purposes only and does not constitute legal advice. Every estate plan is different, and you should consult with an attorney regarding your specific circumstances.
— James E. Schroeder, Attorney at Law
Return of the prodigal son, Relief on main altar in the church of Saint Matthew in Stitar, Croatia