Protect Your Estate with a Florida Spendthrift Trust

Protect Your Estate with a Florida Spendthrift Trust

In 2006, the Florida legislature overhauled the legal code governing Florida trusts. As part of that overhaul, they included a statute that provides a codified spendthrift provision for Florida trusts. Florida courts have generally upheld the idea that if a Florida trust contains a spendthrift provision, the trust is protected from the beneficiary’s creditors. The new Florida law solidified this idea into state code.

To meet the requirements of state law, the trust language must explicitly prohibit voluntary and involuntary transfers of the beneficiary’s interest in the trust. Your Florida estate planning attorney will know the proper language to include.

The “spendthrift” provision is so named because it is supposed to prevent a beneficiary from irresponsibly spending his or her inheritance. In reality, a spendthrift provision has more to do with protecting the bulk of a trust from creditors in case the beneficiary has spent unwisely and is in debt.

The provision basically does not allow a beneficiary to assign or convey his or her interest in the trust to another entity, whether it is an individual or an institution. However, once the trust’s assets have been distributed to the beneficiary, the money is fair game for creditors. The money is only protected as long as it remains in the trust.

Florida law also says that a trustee is not allowed to withhold trust distributions simply to keep the money out of the hands of creditors. If the trustee does not pay the beneficiary, creditors can go after overdue payments. Exceptions to the spendthrift provision are also made for what are known as “creditors of last resort,” which include claims by a former spouse who is due support, claims by creditors who provided a service for the beneficiary’s interest, or claims from the child of a beneficiary.

To learn more about protecting your assets, contact one of the experienced Florida estate planning attorneys at Jurado & Farshchian, P.L., at (305) 921-0440, or email us at info@jflawfirm.com.

 Share

The post Protect Your Estate with a Florida Spendthrift Trust appeared first on Jurado & Farshchian, P.L. Business Lawyer, Real Estate Lawyer, Immigration Lawyer.