Residents of West Palm Beach who are currently involved in estate planning may have questions about Florida law as it relates to establishing a living trust. For instance, can a living trust provide any asset protection if the owner of assets benefits from or controls the trust in any way? In this case, the answer is no. Usually, with a living trust, the owner of assets can serve as or appoint a trustee. The owner can also revoke or make changes to a trust, as well as withdraw trust assets. These powers are very helpful in estate planning and avoiding probate. But if the owner has these powers, creditors are allowed to attach the trust assets.
If an owner would like to minimize future estate taxes or gain asset protection, he or she has the option of giving up the right to benefit from or control a trust. But the majority of owners don't take that route.
A living trust can, however, offer excellent asset protection for future beneficiaries. For example, a trust can help protect against bankruptcy or divorce. A living trust can also safeguard a beneficiary's inheritance if he or she works in a high-risk profession. In order to avoid litigation with creditors of a beneficiary, this kind of asset protection should be carefully written into a living trust.
Under Florida law, there are available exemptions for assets that appear under a living trust and under the original owner's control. Such exemptions may apply to trust interests in limited partnerships and limited liability companies. Exemptions may also affect the cash value in trust-owned life insurance, as well as trust ownership of homestead property.
Source: Florida Today, "Trusts can offer asset protection," Harry Jones, Jan. 8, 2012