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Arizona Spendthrift Trusts & Exceptions

The Arizona Trust Code, via A.R.S. § 14-10502, sets forth requirements as to Arizona spendthrift trust provisions:

A. A spendthrift provision is valid only if it restrains either voluntary or involuntary transfer of a beneficiary's interest.

B. A term of a trust providing that the interest of a beneficiary is held subject to a spendthrift trust, or words of similar import, is sufficient to restrain both voluntary and involuntary transfer of the beneficiary's interest.

C. A beneficiary may not transfer an interest in a trust in violation of a valid spendthrift provision and, except as otherwise provided in this article, a creditor or assignee of the beneficiary may not attach, garnish, execute on or otherwise reach the interest or a distribution by the trustee before its receipt by the beneficiary.

The Arizona Trust Code, via A.R.S. § 14-10503, sets forth exceptions to Arizona spendthrift trust provisions:

A. Even if a trust contains a spendthrift provision, a beneficiary's child who has a judgment or court order against the beneficiary for support or maintenance, or a judgment creditor who has provided services relating to the protection of a beneficiary's interest in the trust, may obtain from a court an order attaching present or future distributions to or for the benefit of the beneficiary only for these matters.

B. The exception prescribed in subsection A is unenforceable against a special needs trust.

C. A spendthrift provision is unenforceable against a claim of this state or the United States only to the extent a statute of this state or federal law so provides.

D. For the purposes of this section, "child" includes any person for whom an order or judgment for child support has been validly entered in this or another state.

This brief overview of some important considerations associated with Arizona spendthrift trusts and exceptions is by no means comprehensive. Always seek the advice of a competent professional when making important legal decisions.

Arizona LLC AttorneyDouglas K Cook is a trust attorney with over 40 years of experience as a practicing attorney. Although Douglas K Cook's office is located in Mesa, Arizona, he represents clients throughout the Phoenix, Arizona Metropolitan area including the following east valley cities: Scottsdale, Paradise Valley, Tempe, Chandler, & Gilbert.

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