Florida recognizes the validity of spendthrift provisions in trusts created for the purpose of benefiting an intended beneficiary. Normally, a beneficiary who is subject to a spendthrift provision is one that is unable to handle his or her money appropriately. There are certain exceptions to the protection that a spendthrift trust may afford, however.
In order to be valid, a spendthrift provision must be written to prevent the beneficiary's voluntary or involuntary transfer of his or her interest in the trust. In other words, the beneficiary must not be able to sell his or her interest in the trust to another person, and the trustee may also not transfer the interest held by the beneficiary. The trustee will manage the trust and make decisions regarding the payment of the beneficiary's expenses without the beneficiary having the ability to make the decision on how to spend his or her assets on his or her own.
While a spendthrift provision may provide protection for the beneficiary against the actions of most creditors, certain creditors are exempted and are able to reach the beneficiary's trust assets. Examples include those who are owed spousal or child support under a court's order, judgment creditors who have performed services needed to protect the beneficiary's trust interest and certain governmental agencies.
Spendthrift trusts may be an excellent tool to pass estate assets to a beneficiary that may be unable to handle financial issues. Such trusts may only be one element in a comprehensive estate plan. Other factors to consider might be wills, powers of attorney and other documentation, and handling these issues may be simpler if a person works with an attorney during the planning stages.