Do you have a child who is financially irresponsible? If so, a spendthrift trust may be just the solution you are looking for to protect him or her from himself or herself as well as from his or her creditors.
Florida authorizes spendthrift trusts under Section 736.052 of the Florida Trust Code. Validity only requires that you, as the trust’s grantor, name your child as the trust’s beneficiary and then add language that prevents him, her or the trustee from voluntarily or involuntary transferring that interest to anyone else.
How it works
Assume that one of your children has already shown that he or she lacks the sound financial judgment necessary to manage his or her money wisely. Maybe he or she maxes out credit cards too often. Maybe he or she “forgets” to pay bills on time. Maybe he or she has a gambling or other problem.
You can specify in the spendthrift trust that this child will not receive his or her inheritance, i.e., the principal of the trust, until an older than usual age, such as age 35 or even 40, by which time most people have become responsible adults.
Spendthrift trust advantages
The advantages are twofold: 1) your child cannot waste his or her inheritance; and 2) his or her creditors cannot access the trust fund for payment of the amounts he or she owes them. The only exceptions are for taxes or other amounts owed to the federal or state government or amounts owed under a valid child support order.