The Florida legislature enacted a new trust law which has favorable asset protection features. The new statute codifies in the statutes the protective benefits of “spendthrift provisions” which limit the beneficiary’s right to assign or pledge their interest in an irrevocable trust. There are some exceptions to spendthrift protection. The new trust code also adds protection to discretionary trust where the trustee may make discretionary distributions of income and principal to the beneficiary. The law states that a beneficiary’s creditors cannot compel a trustee to make a discretionary distribution which may become subject to creditor attack. This protection applies to trusts in which the beneficiary serves as trustee with discretionary powers over his own trust share so long as distributions are subject to certain standards of discretion.
The new statute is effective in January, 2007. The statute then becomes applicable to new as well as previously settled trusts.
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