You want to leave your beneficiaries a gift.
But what if that gift is lost to creditors, divorces, or even reckless spending?

That’s where a spendthrift clause comes in.

Often overlooked in estate planning, this simple clause can add a powerful layer of protection to your trust—preserving your wealth for its true purpose.

💡 What Is a Spendthrift Clause?

A spendthrift clause is a provision in a trust that prevents the beneficiary from:

• Assigning or transferring their interest in the trust

• Using their trust share as collateral for debts

• Losing their inheritance to creditors, lawsuits, or divorcing spouses

It essentially “locks in” the assets within the trust—so the trustee holds the power to distribute, while the beneficiary receives only what is intended, when it’s intended.

🛡️ Why Use a Spendthrift Clause?

Spendthrift clauses are especially useful if your beneficiary is:

• Facing lawsuits or debt

• Going through divorce proceedings

• Financially irresponsible or prone to overspending

• Young, immature, or vulnerable to manipulation

• In a risky profession (doctors, directors, entrepreneurs)

By shielding the assets inside the trust, you ensure they are available for your beneficiary’s future, not lost to poor decisions or bad luck.

🔁 How It Works in Practice

Let’s say you leave RM500,000 to your son in a trust with a spendthrift clause.

If he:

• Declares bankruptcy

• Gets sued

• Tries to borrow money using his inheritance as collateral

…the RM500,000 cannot be touched.
The assets remain in the trust, managed by the trustee, and distributed only according to your instructions—say, RM2,000/month for living expenses, or milestone-based releases (e.g., age 30, 35, 40).

👩‍⚖️ The Role of the Trustee

The trustee becomes the gatekeeper, ensuring that:

• The beneficiary’s needs are met responsibly

• Funds are not released prematurely or recklessly

• The assets stay protected under the legal shield of the trust

This gives you peace of mind knowing your trust is not just a handout—it’s a guarded inheritance.

📌 When Should You Include a Spendthrift Clause?

Consider adding one if:

• You have a young adult beneficiary

• You’re concerned about creditors or lawsuits

• You want to protect the inheritance from third-party claims

• You simply want greater control over when and how funds are released

Spendthrift clauses are legal in Malaysia and widely used by professional trust companies for these very reasons.

💬 Final Thought

A spendthrift clause is one of the kindest things you can give:
Not just money, but protection.

It helps ensure your gift isn’t lost or squandered—but lasts, grows, and provides security for the people you love.

Coming up next:
“5 Things to Consider Before Setting Up a Trust”
Learn how thoughtful planning leads to lasting peace of mind.