Can a Trust Protect Assets in a Florida Divorce?

An irrevocable trust created by a third party can protect assets from equitable distribution in a Florida divorce. A revocable trust provides no protection because the grantor retains ownership and control. The critical distinction is that divorce courts treat trust assets differently depending on the type of trust, who created it, when it was funded, and whether the trust assets were commingled with marital property.

Three Financial Obligations in Divorce

A Florida divorce can impose three distinct financial obligations, and trust protection operates differently against each one.

Equitable distribution divides marital assets between the spouses under Florida Statutes § 61.075. The court classifies property as either marital or nonmarital and divides marital property fairly, though not necessarily equally. Assets held in a properly structured irrevocable trust are generally not marital property and fall outside the court’s equitable distribution authority.

Alimony is a court-ordered payment from one spouse to the other for financial support. Unlike equitable distribution, alimony is a support obligation. Florida law treats support obligations more aggressively than ordinary civil judgments, and many asset protection tools that work against equitable distribution claims do not work against alimony.

Child support is the most protected obligation under Florida law. Courts can reach assets that are otherwise exempt from ordinary creditors, including retirement accounts and annuities, to satisfy child support obligations. Trust assets that have been distributed to a beneficiary can be garnished to satisfy child support and alimony arrearages.

The distinction between these three obligations is fundamental to understanding how trusts interact with divorce. A trust structure that successfully protects against equitable distribution may provide weaker protection against alimony and limited protection against child support enforcement.

Revocable Trusts Provide No Protection

A revocable living trust offers no asset protection in divorce. The grantor retains the power to amend, revoke, or terminate the trust and continues to control the trust assets. Because the grantor maintains ownership for legal purposes, the trust assets are treated as the grantor’s personal property.

Florida Statutes § 736.1105 provides that after a divorce, provisions in a revocable trust that affect the settlor’s former spouse are automatically voided unless the trust document or divorce judgment states otherwise. The statute treats a revocable trust the same way Florida law treats a will after divorce—provisions benefiting the former spouse are revoked by operation of law.

A revocable trust funded with marital assets during the marriage is marital property subject to equitable distribution. The trust form does not change the character of the underlying assets. If both spouses contributed to the trust or both benefited from trust assets during the marriage, the court will divide the trust assets as part of the marital estate.

Irrevocable Third-Party Trusts

An irrevocable trust created by someone other than either spouse, such as a parent or grandparent, provides the strongest protection in divorce. The trust assets were never marital property because neither spouse transferred assets into the trust. The trust exists independently of the marriage.

Florida Statutes § 61.075(7) defines nonmarital assets to include assets acquired by gift, bequest, devise, or descent. An inheritance received in trust qualifies as nonmarital property if the beneficiary spouse maintains the trust assets separately and does not commingle them with marital funds.

Spendthrift provisions prevent the non-beneficiary spouse from attaching the beneficiary’s trust interest, and discretionary distribution protection prevents a court from compelling the trustee to distribute trust assets.

The beneficiary spouse’s interest in a third-party discretionary trust is not an asset that the court can divide. The beneficiary does not own the trust assets and has no enforceable right to demand distributions. The trustee’s discretion over distributions means the beneficiary’s interest has no ascertainable value that the court can assign in the equitable distribution process.

Irrevocable Trusts Created by a Spouse

An irrevocable trust created by one spouse during the marriage raises different questions. The trust assets may have been marital property before the transfer. If the transferring spouse used marital funds to establish the trust, the non-transferring spouse has a legitimate claim that the trust assets should be included in the equitable distribution analysis.

Nelson v. Nelson (2nd DCA 2016) addressed this scenario directly. The husband created an irrevocable trust during the marriage, transferred the family home into it, and named his wife as beneficiary. When the couple divorced, the husband argued the home should be treated as a marital asset subject to equitable distribution. The appellate court held that the trust was a separate legal entity and the home was a trust asset, not a marital asset. The court lacked jurisdiction over the trust property.

The Nelson decision reinforces the principle that once assets are transferred into an irrevocable trust, they belong to the trust and not to either spouse. The transfer must be genuine and irrevocable—if the transferring spouse retains any power to revoke, amend, or reclaim the assets, the transfer is not effective for either asset protection or divorce purposes.

The Commingling Problem

Trust protection in divorce can be destroyed by commingling trust assets with marital funds. If a beneficiary spouse deposits trust distributions into a joint marital account, the trust distributions may lose their nonmarital character. The burden shifts to the spouse claiming the assets are nonmarital to trace the funds back to the trust.

Florida courts apply a tracing analysis to determine whether commingled funds retain their nonmarital character. If the trust beneficiary can demonstrate through financial records that specific funds originated from trust distributions and were not mixed with marital earnings, the court may treat those funds as nonmarital. Without adequate documentation, commingled funds are presumed marital.

Maintaining separate accounts for trust distributions is the single most important practical step a trust beneficiary can take to preserve the trust’s protective character in a potential divorce. Trust distributions should flow into an account titled solely in the beneficiary’s name, and marital funds should never be deposited into that account.

Support Obligations and Trust Assets

Equitable distribution is a property division—it divides what the couple owns. Alimony and child support are ongoing obligations that function more like judgments. The distinction matters because Florida courts have broader enforcement powers for support obligations than for equitable distribution.

A court cannot enter an irrevocable trust to seize assets for alimony or child support. Spendthrift provisions and discretionary distribution protections prevent a court from compelling the trustee to make distributions. However, once the trustee makes a distribution to the beneficiary, the distributed funds become the beneficiary’s personal property. At that point, a court can garnish the distributed funds to satisfy unpaid alimony or child support.

Florida law permits garnishment of up to 40% of a debtor’s disposable earnings for alimony and up to 65% for child support under certain circumstances. Trust distributions that have reached the beneficiary’s hands are subject to these garnishment percentages. The trust itself remains protected, but the money leaving the trust does not.

Courts can also consider a spouse’s trust interest when calculating alimony, even if the trust assets are not directly reachable. A spouse who receives regular discretionary distributions from a trust may be deemed to have greater financial resources than their earned income alone would suggest. The court cannot order the trustee to increase distributions, but the court can factor existing distribution patterns into its alimony calculation.

Self-Settled Trust Limitation

Florida Statutes § 736.0505(1)(b) provides that creditors of a trust’s settlor can reach the maximum amount distributable to the settlor from a self-settled trust. A spouse who creates an irrevocable trust for their own benefit and then faces a divorce judgment for equitable distribution may find that the trust provides no protection against their former spouse’s claims.

The self-settled trust prohibition applies regardless of spendthrift provisions or discretionary distribution language. If the trust settlor is also a beneficiary, the trust is self-settled, and the settlor’s creditors (including a former spouse with an equitable distribution judgment) can reach the trust assets.

A domestic asset protection trust formed in a state like Nevada or South Dakota may provide some protection because those states’ statutes are designed to protect self-settled trusts from creditors. However, Florida courts have been reluctant to apply other states’ DAPT statutes to Florida residents, and the protection is uncertain.

Offshore Trusts and Divorce

An offshore trust established before marriage provides the strongest protection against all three divorce financial obligations. The foreign trustee operates outside U.S. court jurisdiction and cannot be compelled to distribute trust assets or comply with U.S. court orders.

Offshore trust protection against support obligations works differently than protection against equitable distribution. A court can hold a trust beneficiary in contempt for failing to pay alimony or child support, even when the assets are in an offshore trust. The defense to contempt is inability to comply—if the beneficiary genuinely cannot compel the offshore trustee to distribute funds, the beneficiary lacks the ability to pay and cannot be held in contempt.

Offshore trusts carry significant costs ($15,000 to $25,000 to establish, $3,500 to $7,000 annually) and IRS reporting requirements. Using an offshore trust primarily to evade support obligations can also result in negative consequences in other aspects of the divorce proceeding. Courts have broad discretion to draw adverse inferences when a party structures assets to frustrate legitimate obligations.

Fraudulent Transfer Risk

Transferring assets into any trust, whether domestic or offshore, while a divorce is pending or reasonably anticipated exposes the transfer to challenge as a fraudulent conveyance. A court can reverse a transfer made with intent to hinder, delay, or defraud a creditor, including a spouse seeking equitable distribution.

Timing is the central factor. A trust established and funded years before any marital difficulties arose is in a strong position. A trust funded after a spouse files for divorce, or after the marriage has deteriorated to the point where divorce is foreseeable, faces serious fraudulent transfer risk.

The strongest posture is a trust established early in the marriage or before marriage, funded with nonmarital assets, maintained separately from marital finances, and administered by an independent trustee. This combination makes the trust difficult to challenge on fraudulent transfer grounds and positions its assets clearly outside the marital estate. Trusts are one of several asset protection tools available under Florida law, and for divorce-specific strategies beyond trust planning, see how to protect assets from divorce.