SPA Trust

In United States trust law, a SPA Trust is an irrevocable trust that includes a special power of appointment. Unlike general powers of appointment, a special power of appointment is limited to a certain class of persons or entities that may receive the benefit of the power (appointee) from the person in whom the power is vested (donee). Generally, SPA trusts are used to hold property for asset protection purposes, because of the benefits and control a SPA trust offers over the assets protected within the trust. The purpose of a SPA Trust is to protect assets from a person's potential future liabilities by removing the assets from the person's legal ownership. A SPA Trust is created by a legal document which is prepared by an attorney who has expertise with debtor—creditor law, income tax law, gift and estate tax law, and trust law. The SPA Trust is built upon the following legal principles: 1. With respect to an irrevocable trust, a creditor of the settlor may reach the maximum amount that can be distributed to or for the settlor's benefit. 2. A settlor can retain a special power of appointment without subjecting the trust to the claims of creditors. By retaining a special power