Estate planning and asset protection often clash. Good asset protection is frequently poor estate planning. Then, there are times when asset protection and estate planning work together. An example is an irrevocable insurance trust ( ILIT) set up by one spouse when both spouses are facing a substantial judgment.
I suggested that the husband form an ILIT for the benefit of his wife and children. The ILIT would have a spendthrift provision and provide for discretionary distribution of income and principal to the wife and children. Florida law provides that the wife’s creditors could not reach her interest in or garnish distributions from the ILIT. It does that matter that the wife is named as the trustee with full discretion over distributions if the distributions are for her health, education, maintenance and support
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