What does a spendthrift clause do in Ohio?

A term restraining both voluntary and involuntary transfer of a beneficiary's interest — "spendthrift trust" suffices — keeps a creditor or assignee from reaching the interest or a distribution before the beneficiary receives it (R.C. 5805.01); it does not defeat a child's or spouse's support judgment where distributions can be made for the beneficiary's support, or the state's and the United States' claims, but it is enforceable against a former spouse (R.C. 5805.02). A wholly discretionary trust's interest is beyond a creditor's reach regardless (R.C. 5805.03).

Which assets does Ohio exempt from creditors?

Among them, a judgment debtor's interest in one residence up to the indexed amount, contracts of life or endowment insurance or annuities as R.C. 3911.10 exempts them, rights under pensions and similar plans to the extent reasonably necessary for support, and the assets in individual retirement accounts and similar plans except those deposited to evade a debt (R.C. 2329.66(A)(1)(b), (6), (10)); the dollar figures are adjusted every third April by the Ohio Judicial Conference (R.C. 2329.66(B)). Life insurance proceeds held for a named beneficiary are exempt from the insured's creditors under R.C. 3911.10.

Does a revocable trust protect assets from the settlor's creditors?

No. During the settlor's lifetime the property of a revocable trust is subject to the settlor's creditors, and a creditor of the settlor of an irrevocable trust may reach the maximum amount distributable to or for the settlor's benefit, subject to the Ohio Legacy Trust Act (R.C. 5805.06(A)); a transfer made with intent to hinder, delay or defraud a creditor, or without reasonably equivalent value while insolvent, is fraudulent as to the creditor (R.C. 1336.04, 1336.05).

Ohio Asset Protection: The Basics

Asset protection turns on your specific facts. A free role check shows you where you stand — and these questions belong with a Ohio attorney.

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What asset protection means — and what it doesn't

Asset protection is lawful planning, done in advance, to reduce exposure to future creditors. It is not a way to hide assets, defeat existing claims, or guarantee a result. Whether any protection applies depends on facts, timing, titling, the type of claim, and Ohio and federal law — which is why it's an attorney's call, not a do-it-yourself project.

Ohio features people ask about

Homestead

R.C. 2329.66(A)(1)(b) exempts a person's interest in one parcel or item of real or personal property the person or a dependent uses as a residence from execution, garnishment, attachment or sale to satisfy a judgment, up to the amount the section states, which the Ohio Judicial Conference adjusts every third April for the consumer price index (R.C. 2329.66(B)); the exemption is the debtor's own. Whether it applies to your situation is a question for an attorney.

A spendthrift or wholly discretionary trust someone else creates

A valid spendthrift provision restrains both voluntary and involuntary transfer, so a beneficiary's creditors generally cannot reach the interest or a distribution before the beneficiary receives it (R.C. 5805.01) — with exceptions for a child's or spouse's support judgment where distributions can be made for the beneficiary's support, and for claims of the state or the United States (R.C. 5805.02); no creditor of a beneficiary of a wholly discretionary trust may reach the interest by any means (R.C. 5805.03). A trust you create for yourself is different: your creditors can reach the maximum that can be distributed to you, and a revocable trust's property is reachable during your life (R.C. 5805.06) — unless the trust is a legacy trust that meets the Ohio Legacy Trust Act's requirements (R.C. 5816.02; R.C. 5816.07).

Exempt assets (life insurance, retirement)

Ohio law exempts from a judgment creditor the person's rights in pensions, retirement accounts and similar plans, including individual retirement accounts (R.C. 2329.66(A)(10)), the person's interest in contracts of life or endowment insurance or annuities (R.C. 2329.66(A)(6)), and life insurance proceeds payable to a spouse, children, dependents or a trustee for them, free from the insured's creditors (R.C. 3911.10) — subject to conditions and exceptions, among them premiums paid in fraud of creditors. Treat these as “may have special rules — confirm with an attorney,” never as a guarantee.

A revocable living Trust is not asset protection

Because you keep full control of a revocable living Trust, its assets are generally still reachable by your creditors during your life. A revocable Trust is an administration and probate-avoidance tool. Strategies that may offer protection are different, fact-specific, and an attorney's domain.

The timing trap: fraudulent transfers

Timing is everything. Moving, retitling, converting, or giving away assets after a creditor, lawsuit, divorce, bankruptcy, lien, collection, or tax issue has arisen can be undone as a fraudulent transfer under Ohio law (R.C. 1336.04; R.C. 1336.05) — and can make things worse. Moving assets in the face of a claim is the kind of step trustees commonly bring to a licensed Ohio attorney first.

Where to start in Ohio

Asset protection is one of the most fact-specific areas of the law — the right approach depends entirely on your assets, your family, your risks, and timing. This page is general information only. A free role check can show you where you stand, and these decisions belong with a Ohio attorney.

Asset protection depends on facts, timing, documents, creditor claims, beneficiary circumstances, tax issues, and applicable law. TrusteeClear does not guarantee that any asset is protected, and nothing here is legal advice.

General information about Ohio law, not legal advice.

Frequently asked questions

What does a spendthrift clause do in Ohio?: A term restraining both voluntary and involuntary transfer of a beneficiary's interest — "spendthrift trust" suffices — keeps a creditor or assignee from reaching the interest or a distribution before the beneficiary receives it (R.C. 5805.01); it does not defeat a child's or spouse's support judgment where distributions can be made for the beneficiary's support, or the state's and the United States' claims, but it is enforceable against a former spouse (R.C. 5805.02). A wholly discretionary trust's interest is beyond a creditor's reach regardless (R.C. 5805.03).
Which assets does Ohio exempt from creditors?: Among them, a judgment debtor's interest in one residence up to the indexed amount, contracts of life or endowment insurance or annuities as R.C. 3911.10 exempts them, rights under pensions and similar plans to the extent reasonably necessary for support, and the assets in individual retirement accounts and similar plans except those deposited to evade a debt (R.C. 2329.66(A)(1)(b), (6), (10)); the dollar figures are adjusted every third April by the Ohio Judicial Conference (R.C. 2329.66(B)). Life insurance proceeds held for a named beneficiary are exempt from the insured's creditors under R.C. 3911.10.
Does a revocable trust protect assets from the settlor's creditors?: No. During the settlor's lifetime the property of a revocable trust is subject to the settlor's creditors, and a creditor of the settlor of an irrevocable trust may reach the maximum amount distributable to or for the settlor's benefit, subject to the Ohio Legacy Trust Act (R.C. 5805.06(A)); a transfer made with intent to hinder, delay or defraud a creditor, or without reasonably equivalent value while insolvent, is fraudulent as to the creditor (R.C. 1336.04, 1336.05).

General information about Ohio law, not legal advice.