Many times a trust vehicle is utilized to protect assets from the claims of creditors.
A trust cannot generally be established by a debtor which puts the debtor’s property beyond the reach of creditors yet gives the debtor the use of the property for life.
However, a trust is frequently created with ‘spendthrift’ language which provides that the income and/or principal of the trust cannot be attached by creditors of the beneficiary of the trust.
Florida recognizes spendthrift trust provision.
While a spendthrift clause may be added to a trust established to benefit the at-risk individual and others, such individual may find that the trust assets are not protected from the claims of creditors, at least to his or her portion of the trust.
This is frequently true even though the trust is irrevocable. (Spendthrift provisions are, however, of some benefit in protecting pension assets.)
Certain other types of trust, particularly when coupled with spendthrift language, may protect certain assets from the claims of creditors.