Spendthrift Trusts in Florida

A spendthrift trust in Florida is a trust that contains a provision restricting both the voluntary and involuntary transfer of a beneficiary’s interest. Florida Statutes § 736.0502 recognizes spendthrift provisions as valid creditor protection tools, preventing a beneficiary’s creditors from attaching the beneficiary’s trust interest before the trustee distributes it.

Spendthrift protection is one of two primary creditor protection mechanisms in Florida trust law. The other is discretionary distribution protection under § 736.0504.

How a Spendthrift Provision Works

A spendthrift provision is a clause in the trust agreement that prohibits the beneficiary from voluntarily assigning, pledging, or transferring their interest in the trust to any third party. Because the beneficiary cannot voluntarily transfer their interest, creditors cannot involuntarily attach it either. The logic is straightforward: a creditor’s rights against a trust interest cannot exceed the beneficiary’s own rights.

Florida law requires the spendthrift provision to restrain both voluntary and involuntary transfers to be valid. A provision that only restricts voluntary transfers, or only restricts involuntary transfers, does not qualify as a valid spendthrift clause under § 736.0502. Both restrictions must appear in the trust document.

The spendthrift provision protects the beneficiary’s interest while assets remain inside the trust. Once the trustee distributes assets to the beneficiary, the distributed funds become the beneficiary’s personal property and are fully exposed to the beneficiary’s creditors. The protection attaches to the trust interest, not to the money itself. A creditor can garnish a beneficiary’s bank account after a distribution has been deposited, even though the funds originated from a spendthrift trust.

Spendthrift Protection vs. Discretionary Distribution Protection

Florida law provides two distinct creditor protection mechanisms for trust beneficiaries, and the difference between them determines the strength of the trust’s overall protection.

Spendthrift protection under § 736.0502 prevents creditors from attaching the beneficiary’s interest in the trust. It operates as a shield around the beneficiary’s right to receive distributions.

Discretionary distribution protection under § 736.0504(2) prevents creditors from compelling the trustee to make distributions. It operates as a shield around the trustee’s decision-making authority. When the trustee has discretion over whether to distribute income or principal, no creditor can force the trustee to exercise that discretion in the creditor’s favor.

A trust with only a spendthrift provision but mandatory distribution requirements has a gap. If the trust requires the trustee to distribute all income annually, the beneficiary has an enforceable right to that income. The spendthrift clause prevents creditors from attaching the beneficiary’s interest, but § 736.0503(3) allows certain exception creditors to obtain a court order attaching present or future required distributions.

A trust that combines spendthrift provisions with fully discretionary distribution authority eliminates this gap. The spendthrift clause prevents creditors from attaching the beneficiary’s interest, and the discretionary distribution clause prevents creditors from compelling the trustee to distribute anything at all. The beneficiary has no enforceable right to any specific distribution, which means there is nothing for a creditor to attach or garnish before the trustee voluntarily decides to distribute.

Protection Type	Statutory Basis	What It Prevents	Limitation
Spendthrift	§ 736.0502	Creditor attachment of beneficiary’s trust interest	Exception creditors can reach mandatory distributions
Discretionary	§ 736.0504(2)	Creditor compelling trustee to distribute	Trustee must genuinely exercise discretion
Combined	Both statutes	Both attachment and compelled distributions	Strongest protection available under Florida trust law

Exception Creditors

Florida Statutes § 736.0503(2) identifies three categories of creditors that can overcome a spendthrift provision. Even a valid spendthrift clause does not protect against claims by the beneficiary’s child, spouse, or former spouse with a support or maintenance judgment, a judgment creditor who provided services to protect the beneficiary’s trust interest, and the state of Florida or the United States government to the extent provided by law.

Exception creditors can obtain a court order attaching present or future distributions from a spendthrift trust. However, § 736.0503(3) limits this remedy to a “last resort” and requires the exception creditor to make an initial showing that traditional collection methods are insufficient.

The exception creditor rules apply to spendthrift trusts with mandatory distributions. The interaction between exception creditors and discretionary trusts is more complex. Section 736.0504(2) states that a creditor of the beneficiary, “including a creditor as described in s. 736.0503(2),” cannot compel a discretionary distribution. Read literally, this language means that even exception creditors cannot force a trustee to exercise discretion to distribute.

The Florida Bar has analyzed this tension in scholarly commentary, noting that a discretionary trust may provide stronger protection than a spendthrift trust against exception creditors, particularly former spouses seeking support judgments. Drafting a trust as a discretionary spendthrift trust rather than a mandatory-distribution spendthrift trust is the standard approach for maximizing creditor protection.

The Self-Settled Trust Problem

A spendthrift provision does not protect the trust’s settlor from the settlor’s own creditors. Florida Statutes § 736.0505(1)(b) provides that the settlor’s creditors can reach the maximum amount distributable from a trust to the extent the settlor is a beneficiary.

A person who creates a spendthrift trust for their own benefit has not accomplished any creditor protection under Florida law. The spendthrift clause is valid as to the beneficiary’s creditors when the beneficiary and the settlor are different people. When the same person occupies both roles, the self-settled trust prohibition overrides the spendthrift protection entirely.

The distinction matters because some states (Nevada, South Dakota, and others) have enacted domestic asset protection trust statutes that override the self-settled trust limitation. Florida has not. A Florida resident who creates a spendthrift trust and names themselves as a beneficiary receives no creditor protection from the spendthrift provision against their own creditors.

Spendthrift Trust vs. Asset Protection Trust

The term “spendthrift trust” describes a trust feature (the spendthrift clause), not a specific trust type. Any irrevocable trust can include a spendthrift provision. A revocable trust can also include spendthrift language, but the provision provides no protection during the settlor’s lifetime because the settlor’s creditors can reach all revocable trust assets under § 736.0505(1)(a).

An asset protection trust is a broader concept describing any trust designed primarily to protect assets from creditors. A well-designed asset protection trust typically includes spendthrift provisions as one component of a layered protective structure that also incorporates discretionary distribution authority, independent trustee selection, and potentially offshore jurisdiction.

A spendthrift clause is necessary but not sufficient for maximum creditor protection. A trust that relies solely on its spendthrift provision, without discretionary distribution authority, leaves the beneficiary exposed to exception creditors who can attach mandatory distributions. The strongest protective structure under Florida law combines spendthrift provisions, fully discretionary distribution authority, and an independent trustee who genuinely exercises discretion.

Drafting Requirements

A valid Florida spendthrift provision must expressly restrain both voluntary and involuntary transfers of the beneficiary’s interest. The provision does not need to use the word “spendthrift,” but the dual restriction must be clear from the trust language.

Standard spendthrift language typically states that no beneficiary may voluntarily or involuntarily assign, alienate, pledge, encumber, or otherwise transfer their interest in the trust, and that no creditor, assignee, or other third party may attach, levy upon, or otherwise reach the beneficiary’s interest. Variations in phrasing are acceptable as long as both voluntary and involuntary restrictions are present.

The spendthrift provision should appear in every irrevocable trust drafted for asset protection purposes. Including the provision adds no cost to the trust and significantly strengthens its creditor protection. Omitting a spendthrift clause from an irrevocable trust is a drafting error that leaves the beneficiary’s interest unnecessarily exposed.

Protection Ends at Distribution

Once the trustee distributes cash, securities, or other property to the beneficiary, the assets leave the trust’s protective framework and become the beneficiary’s personal property. Creditors can garnish bank accounts, levy on investments, and execute against any property the beneficiary personally owns.

The practical implication is that a spendthrift trust provides maximum protection when assets remain inside the trust for as long as possible. Dynasty trusts are designed around this principle, holding assets in trust across multiple generations rather than distributing them outright. A trustee who makes small, periodic discretionary distributions rather than large lump-sum payments limits the window during which creditors can reach the distributed funds.

Trustees can also make distributions in kind rather than in cash. Purchasing property in the trust’s name for the beneficiary’s use (such as a residence or vehicle) keeps the asset titled in the trust and protected by the spendthrift provision, while still allowing the beneficiary to benefit from the property. Spendthrift provisions are one component of a broader trust-based creditor protection framework that also includes discretionary distribution authority, independent trustee selection, and proper trust administration.