Say you have assets that you want to leave to your loved ones in Miami, yet you are concerned that their already observed tendencies to be reckless with their spending could potentially get them into trouble. This scenario is the same that has faced many of the clients that we here at The Law Offices of Frye & Vazquez, P.L. have assisted in the past. Even placing your assets in a trust may not completely protect them from your irresponsible beneficiaries (or the creditors that may eventually come after them). That is, of course, only if you do not include the right provisions.
Florida’s Trust Code does indeed allow you to include a spendthrift provision in a trust that you create. Such a provision allows your chosen trustee to have complete authority over how the trust’s assets are used to benefit your beneficiaries. With such a trust, the trustee could retain its assets to ensure that your beneficiary has funds to help pay for his or her schooling or buy a home, rather than giving him control to draw from trust assets to buy a brand new Ferrari. The Trust Code does limit spendthrift provisions, however, stating that they must restrain the voluntary and involuntary transfer of a beneficiary’s interest.
A huge benefit to spendthrift trusts is that creditors can only go after those funds that have already been distributed to the beneficiary. Exceptions to this include:
- If your beneficiary owes child or spousal support arrears
- If a judgment comes from a company whose services protected the beneficiary’s interest in the trust
- If your beneficiary is subject to a federal or state claim
More information on protecting assets in a trust can be found by continuing to browse through our site.