FAQs About Spendthrift Trusts In Florida Estate Planning
Many people assume that trusts are a Florida estate planning tool reserved for the wealthy, and it is true that high net worth individuals have many reasons to consider making such an arrangement. However, if you have concerns about protecting your legacy, one particular type of trust may be an option to consider: A “spendthrift” trust, which enables you to establish specific controls on distributions. The interests of certain beneficiaries may be better served when there is some structure to what they receive and when.
There are different ways to set a spendthrift trust, and numerous options for personalizing the provisions to achieve your objectives. You can count on a Dade City trust lawyer to advise you and assist with document preparation, but some answers to frequently asked questions are also informative.
What does a spendthrift trust do? The relevant concepts are covered in Florida’s statute on spendthrift provisions, which address two key goals that you may be considering with respect to estate planning:
- By including spendthrift provisions in a trust, you have control over distributions to one or more beneficiaries. You can draft clauses that only allow distributions based upon age, education, or life milestones.
- Subject to some exceptions, you can protect your legacy from creditors and other third parties that pursue your beneficiary for legal reasons.
Why should I consider spendthrift provisions in a trust? If the above two estate planning goals apply to your situation, a spendthrift may be an effective way to achieve them. With a properly structured document, you can reduce the potential for irresponsible spending and prevent creditors from accessing trust assets. This option may be ideal:
- If one or more beneficiaries is younger and lacking financial sophistication;
- For a beneficiary with a substance abuse problem; or
- When you have concerns about a beneficiary’s current or potential debt.
Who are the parties to a spendthrift trust? Besides the beneficiary who is in the position to receive distributions of trust principal and income, other parties involved with the trust include:
- The grantor who transfers property into the spendthrift trust, which will be you when you create the trust; and
- A trustee who you appoint to manage trust property and make distributions according to the terms of the trust.
How can I create a spendthrift trust? You might opt to include spendthrift provisions in a living trust that is effective during your lifetime. Under the circumstances, you could act as trustee to carry out the terms of the trust; your successor would take over at your passing OR if you become incapacitated. In addition, you can also include spendthrift provisions in a testamentary trust, which is created by your will and becomes effective at your death.
Talk to a Florida Estate Planning Attorney About Spendthrift Trusts
Hopefully, these answers to frequently asked questions about spendthrift trusts helps you understand the basics. For personalized information, please contact The Law Office of Laurie R. Chane to set up a consultation today. You can reach our Dade City, FL offices by calling 352-567-0055 or completing our online contact form.