Florida residents often include trusts in their estate plans to avoid the probate process, have more control over how their assets are distributed, reduce estate taxes and protect against creditors. Spendthrift trusts can be particularly useful when heirs have unpaid debts or testators are worried about how they will spend their inheritances. Assets placed in a spendthrift trust are shielded from creditors and distributed at the discretion of the trustee in accordance with the trust agreement.
This kind of arrangement is popular among the wealthy, but spendthrift trusts can also be valuable to those with more modest estates. These trusts can be used to limit the amount of money distributed to heirs with substance abuse or gambling problems, but they must be drafted carefully and include language that makes the intentions of the grantor clear. This is known as a spendthrift provision.
Spendthrift trusts often grant a great deal of discretion to trustees, and this can lead to animosity or even legal challenges when heirs feel that they are being treated unfairly. Testators may be able to avoid such situations by explaining to their heirs how they selected their trustees and their reasons for drafting a spendthrift trust in the first place. Most states have laws in place to prevent individuals from avoiding their debt obligations by placing their assets into a spendthrift trust and then naming themselves as the beneficiary.
The decisions made while drafting a trust can cast long shadows, and attorneys with estate planning experience may urge testators to consider their options carefully before choosing trustees and designating how their assets will be distributed. Attorneys might also suggest that trusts and other estate planning documents be revisited regularly or when situations change. Doing this helps to ensure that estate plans still represent the wishes of the testator.