Florida Spendthrift Trusts

A useful estate planning tool has long been the spendthrift trust with discretionary distributions. However, the Florida Supreme Court has ruled in Bacardi v. White 463 So. 2d 218 (Fl., 1985), that spendthrift trusts are not recognized for certain exception creditors, former spouses and children for support and maintenance and judgment creditors for services. Recently Florida amended the Trust Code to bring it more in line with the Uniform Probate Code, this created a dichotomy in the minds of many experts as to whether or not a spendthrift trust with discretionary power to distribute is now exempt from these super creditors. I have long thought that it is best that one err on the side of caution, thus if a Florida resident creates a spendthrift trust, for another Florida resident or makes the Trust subject to Florida law, the desired effect may not be achieved. It is better for the Grantor to choose an out of state trustee in a spendthrift friendly state like Virginia, Delaware, Alaska, etc. to administer the trust for the Florida beneficiary and adopt the law of one of those jurisdictions as the law of the Trust. In such a circumstance, you can achieve the savings you want including dynasty or generation skipping objectives without subjecting the Trust to potential drain by a lawyer or ex-spouse.

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