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Distinctions can also be made in the rights of the beneficiary. Traditionally, a fundamental right of the beneficiary is to demand transfer by the trustee of ownership of the assets in the trust. But the terms of the trust may provide that for a certain period, or indefinitely, the beneficiary will have a right only to the income on the property, for example receiving regular payments from the trust, or may only have a right to make present use of the assets. The scope of the beneficiary’s rights assumes additional importance as it determines the extent to which the trust assets are protected against the beneficiary’s own creditors, who can execute only against any rights the beneficiary has under the trust. If these rights do not include a claim for transfer of ownership of the property in the trust, then as a rule the assets of the trust will be protected against execution (in particular, execution against the trust by the trustee’s creditors is excluded). Indeed, this is one of the reasons for establishing trusts designed to protect beneficiaries against their own profligacy (known as “spendthrift trusts”) or more generally against the consequences of poor life choices.
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