What is a Spendthrift Trust?
Do you have a son or daughter who is financially irresponsible? Do you worry about the decisions he or she may make after you die? You are not alone. Many parents have concerns about their children squandering their inheritance and making foolish investments.
One solution is to leave your child nothing. Florida law allows you to disinherit a child 18 years old or older by clearly stating your intention to do so within your will. In some cases, a Florida resident may also disinherit a minor child as well.
A more realistic option, however, is to create a gift trust that has a spendthrift provision. By including a spendthrift provision, you ensure that the assets within the trust cannot be used to pay the child’s creditors.
The following are the most important details of Statute 736.0502, Florida’s spendthrift provision:
- Such a provision is valid only if it restrains both voluntary and involuntary transfer of a beneficiary’s interest.
- A term of a trust providing that the interest of a beneficiary is held subject to a spendthrift trust, or words of similar import, is sufficient to restrain both voluntary and involuntary transfer of the beneficiary’s interest.
- A beneficiary may not transfer an interest in a trust in violation of a valid spendthrift provision, and except as otherwise provided in this part, a creditor or assignee of the beneficiary may not reach the interest or a distribution by the trustee before receipt of the interest or distribution by the beneficiary.
- A valid spendthrift provision does not prevent the appointment of interests through the exercise of a power of appointment.
Whether you are interested in creating a trust with a spendthrift provision or establishing a comprehensive estate plan in Tampa or elsewhere in Florida, it is in your best interests to obtain guidance from a trustworthy attorney. He or she can assess your situation and help you make long-term decisions that benefit you and your family.