What defines a spendthrift trust?

A spendthrift trust is specifically designed to protect the beneficiary's assets from being squandered or subjected to creditors' claims before they reach a certain level of maturity or responsibility. In this type of trust, a trustee is appointed to manage the assets and distributions for the benefit of the beneficiary. The arrangements typically stipulate that the beneficiary cannot access the principal of the trust until a specified age or until certain conditions are met, such as completing education or maintaining stable employment.

By having a trustee manage the assets, the trust ensures that the beneficiary is not able to mishandle the funds or be pressured to use them inappropriately, hence the term "spendthrift." This serves as a protective mechanism to ensure the long-term financial stability of the beneficiary, allowing them to receive distributions in a controlled manner.

The other options do not accurately describe the nature of a spendthrift trust. Allowing beneficiaries to manage their own gifts, focusing solely on charitable purposes, or creating a trust with no defined end date do not align with the fundamental characteristics that define a spendthrift trust and its purpose of safeguarding assets within a managed framework until certain conditions are fulfilled.