Spendthrift clauses add valuable and essential protections to trusts

Almost every family has at least one individual who just can’t seem to manage money effectively. If that person is someone to whom you wish to bequeath some or all of your estate, the answer to this problem may be a very carefully designed trust. Trusts are flexible estate planning tools that meet a number of different requirements when structured properly. With the creation of a spendthrift trust, you can establish very useful protections for your estate assets that fund essential needs for beneficiaries without putting the assets at great risk. At The Law Offices of Gregory W. Kabel, P.A., our Fort Lauderdale estate planning attorney is highly knowledgeable in effectively navigating the very specific and complex Florida laws governing spendthrift clauses. We have extensive experience designing complex trusts to accomplish what is needed while preventing beneficiaries from squandering their inheritance.

The basics of a spendthrift trust

In a trust arrangement, a trustee holds assets for the benefit of other parties, called beneficiaries. The person who creates and funds the trust is the grantor or settlor. To create a spendthrift trust, a spendthrift clause is added to protect beneficiaries from extravagant and wasteful spending habits. Essentially, saving heirs from themselves and excessive spending. The provision also prevents most creditors from attaching a garnishment to future or present distributions from the trust, as long as they have not directly received it. A spendthrift trust also bars the beneficiary from assigning their interest in the trust to anyone else. You may add these provisions to a variety of different trust arrangements in order to meet multiple objectives for your estate plan.

Spendthrift trust limitations

No matter how well-designed, a spendthrift trust won’t provide protections from every eventuality. The following limitations must be taken under advisement when structuring your trust:

• The Trustee – Selecting a responsible trustee is essential.
• Public Policy Exceptions – The Florida Supreme Court has ruled those with child support and alimony claims may override a spendthrift clause to pursue satisfaction of their judgments via garnishment of the trust income.
• Exception Creditors – The U.S. Government, State of Florida and anyone who has provided services related to protecting a beneficiary’s interest in the spendthrift trust are also exceptions to the creditor exemption.
• Non-discretionary distribution – In these instances, where distribution is based upon some formula or other non-discretionary distribution, a creditor may have access to the mandated distribution.
• After distribution – Once a beneficiary has taken possession of assets or funds, his creditor can gain access.
• Beneficiaries only – You may not create a spendthrift trust for your own benefit.

Our attorney further explains any limitations to you in detail and helps you create a trust that best meets your requests, restrictions and requirements.

Consult with a dedicated Fort Lauderdale trust attorney today to protect your legacy

If you are considering establishing a trust for your beneficiaries following your death, speak to our learned attorney at The Law Offices of Gregory W. Kabel, P.A. for knowledgeable legal counsel. Our office provides specialized estate planning services in Fort Lauderdale, Wilton Manors and all of Broward County. Call 954-761-7770, or contact us online today for a confidential consultation.