Irrevocable trusts are a popular way for Florida families to transfer wealth to their heirs while minimizing tax burdens. There are, however, many nuances in the way these trusts can be constructed that change how money flows from grantors to beneficiaries. Laws that regulate the way trusts are executed in Florida vary from other states in the country, so it's important for each family to carefully consider their own options.
One of the biggest concerns for families is whether the assets in a trust can be taken by third parties that are not beneficiaries such as divorced spouses or creditors. This is complicated and varies by state. In some cases, courts decide this issue based on whether or not the beneficiary has control of trust fund distribution. If they don't have control, third parties probably can't access the assets. This isn't always true, though.
There are a few effective ways to safeguard assets from unintended beneficiaries. One is to limit the powers of appointment as much as possible. This reduces the amount of exposure the assets in the trust have to third parties. Another option is to avoid naming the beneficiary as a trustee. When the beneficiary plays double duty, this allows creditors and divorced parties to claim that the beneficiary has outright ownership to the assets. Families are advised to combine the expertise of financial advisers with estate planning lawyers.
Creating trusts that preserve assets for intended beneficiaries is ultimately the responsibility of an estate planning attorney. It's their job to provide a client with viable legal options while delivering knowledgeable answers to any relevant questions. An experienced attorney can draft legal documents that stand up to the attacks of creditors, divorced parties, and other entities that attempt to access the funds.