In New York, which statement about spendthrift protections is true?

• A. All trust income is fully transferable
• B. Principal and income interests are both fully alienable
• C. Income interests are not alienable due to spendthrift protection
• D. Spendthrift provisions are prohibited in New York

Answer: (C)

Spendthrift protections keep a beneficiary’s right to receive trust distributions from being transferred or used to satisfy debts. In New York, a trust with a spendthrift clause generally bars both the voluntary transfer of the beneficiary’s interest and attachment by creditors, meaning the beneficiary cannot alienate the right to receive income or to enjoy principal. Distributions are controlled by the trust terms and the trustee, not by the beneficiary’s creditors.

Because of this, income interests are not alienable due to the spendthrift protection – creditors can’t reach those rights before a distribution is made, and the beneficiary cannot sell or assign their interest. The other statements conflict with this principle: New York does recognize spendthrift clauses, and they do not render all interests fully transferable.