A spendthrift trust is an estate planning tool you can use to protect your heirs from creditors and help ensure their financial responsibility. At The Millman Law Group, our attorneys are prepared to help you understand the advantages of spendthrift trusts in Florida and know when your heirs may benefit most from them. If you want to know more about these trusts, we answer a few of our clients’ most frequently asked questions below.
What Is a Spendthrift Trust?
A spendthrift trust is a form of irrevocable trust. It is designed to limit a beneficiary’s access to trust funds. It prevents them from spending recklessly or having assets seized by creditors. The key features of the trust are:
- The trustee has control over the distribution of funds
- The beneficiary cannot access funds directly or pledge them as collateral
- Protects trust assets from lawsuits and creditors
Why Should You Establish Spendthrift Trusts?
There are three primary reasons people may establish spendthrift trusts in Florida:
- Protecting heirs from creditors: Creditors cannot access the trust funds, as the trust assets are not considered the beneficiary’s property
- Safeguarding assets from divorce: If the beneficiary divorces, the trust assets are protected from being counted and divided as marital property if the trust was established before marriage.
- Preventing reckless spending: A spendthrift trust provides your beneficiary with a steady income rather than one large sum.
Are There Potential Drawbacks?
Spendthrift trusts offer many benefits, but there are potential drawbacks to consider:
- Limited flexibility for the beneficiary: this may be a disadvantage if the beneficiary needs funds for an emergency or unforeseen expenses
- Irrevocability: These trusts are typically irrevocable, meaning they cannot be modified or terminated once established.
What Are the Key Considerations When Establishing Spendthrift Trusts?
Setting up a spendthrift trust requires careful planning by you and your estate planning attorney. First, a responsible and trustworthy trustee must be selected as they will control the trust assets. Second, the trust document must be drafted carefully, outlining the terms of the spendthrift provision and conditions for the distribution of funds. Working with an experienced estate planning attorney is always best to ensure success.
Can a Spendthrift Trust Be Modified or Terminated Once Established?
Because spendthrift trusts are typically irrevocable, they cannot be modified or terminated after they are established. However, some jurisdictions may allow changes under particular conditions, such as all parties agreeing to changes or in the event of an unanticipated change in circumstances. Consulting with your Millman Law Group attorney can help you avoid potential problems or concerns when managing spendthrift trusts in Florida.
Estate Planning Made Easy With Millman Law Group
Millman Law Group, PLLC is rare because it’s one of the only law firms that offer life planning in South Florida. From life care planning to the preparation of detailed estate plans, Millman Law Group has committed to serving Floridian elderly communities in Boca Raton, Palm Beach County, Ocean Ridge, Hillsboro Beach, and many other areas since 2018. Our dedicated team also specializes in special needs Trusts and catering to any age demographic because we know for certain it’s never too early to start preparing you and your family for your future. For the latest news in estate planning and elder care law, follow us on Facebook, Twitter, Linked In, and Pinterest. You can also contact us at 561-463-6480.