Can You Transfer Assets Out of an Irrevocable Trust?

By design, an irrevocable trust is meant to be unchangeable. Once you place assets into it, you generally cannot simply withdraw them. However, there are limited circumstances and legal mechanisms in Florida that might allow changes or distributions beyond the trust’s ordinary terms.

Understanding Irrevocable Trusts in Florida

An irrevocable trust is a binding agreement between a settlor (trustmaker), a trustee, and beneficiaries that cannot be revoked or amended at will.

In other words, once you transfer property into an irrevocable trust, it is considered a permanent gift to the trust beneficiaries. The trust itself becomes the legal owner of those assets, not you.

Florida law confirms that assets in an irrevocable trust are owned by the trust, not by the grantor, which means the original owner cannot reclaim the trust assets for their own benefit.

This loss of direct control over the assets is intentional. By giving up personal ownership, the trustmaker also gains certain benefits.

For example, assets in a properly formed irrevocable trust are usually shielded from the personal creditors of both the trustmaker and the beneficiaries. In Florida, Chapter 736 of the Florida Statutes (the Florida Trust Code) provides that property held in an irrevocable trust with a valid spendthrift clause is protected from the creditors of the beneficiaries.

Similarly, if the trust is created for estate tax planning, those assets may be removed from the grantor’s taxable estate.

In short, once assets go into an irrevocable trust, they are legally separated from the grantor.

No Easy Asset Removal

Under Florida law, the general rule is that the trustmaker cannot transfer assets out of an irrevocable trust. Once the trust is established and funded, the trust terms control what happens to the assets.

Typically, assets may only be distributed from the trust to the named beneficiaries at the times and in the manner specified in the trust document. The original trustmaker cannot simply change their mind later and pull the property back into their own name.

For example, if you create an irrevocable trust to hold your vacation home for your children’s benefit, you can’t later decide to take the home out of the trust just because you want to use it or sell it for your own benefit. Legally, it’s no longer yours.

Florida courts emphasize that “irrevocable” means just that. Even in a common scenario like an irrevocable life insurance trust (ILIT), once you contribute a policy to the trust, you cannot reclaim ownership of that policy or change the trust’s terms.

The trust is intended to operate autonomously according to the instructions you wrote when you created it. In practice, this inflexibility is what gives the trust its asset protection and tax advantages.

Assets transferred to an irrevocable trust are no longer owned by the grantor or subject to the grantor’s creditors. But the grantor can’t reach in and grab those assets either.

Could you draft an irrevocable trust with a special clause allowing the settlor to withdraw assets?

Technically, a trust agreement could be written to permit some form of withdrawal or transfer. However, doing so would undermine the very purpose of the trust.

Any such provision creates a window through which creditors or courts can force access to the assets. A trust that allows the settlor to withdraw assets at will wouldn’t be considered truly irrevocable. In Florida, it wouldn’t offer asset protection to the settlor.

Florida law is clear that if a creditor can claim the assets you reserved the right to withdraw, the trust offers no shield for those assets. A well-drafted irrevocable trust for asset protection, therefore, deliberately avoids giving the settlor any direct right to the assets after transfer.