Friday, July 13, 2012

The Spendthrift Clause

Question: My son is mired in debt, ex-wife, the whole 9 yards. I wish to leave him money in my estate but fear it will just go to his creditors. How do I leave something for my son in my last will? Or do I need a trust? Tom (Tampa, FL USA)
Tom, you are facing a rather common situation in today's world. You are correct to be concerned about leaving a bequest to your son in your last will. The typical method for dealing with this situation is to create a testamentary trust in companion to your last will. The bequest to your son shall be made not directly to him but, rather, to the trust created for his benefit. The trick is to draft the trust in such a fashion that your son's creditors cannot reach the assets of the trust. This is generally done with a spendthrift clause, which "restrains both voluntary and involuntary transfer of a beneficiary’s interest". Florida follows the Uniform Trust Code in regard to the enforceability of spendthrift clauses against creditor collection actions. Of particular note in your case is Florida Trust Code Section 736.0503, Exceptions to spendthrift provision. Subsection (2)(a) grants an exception to the enforce of a spendthrift clause against a "beneficiary’s child, spouse, or former spouse who has a judgment or court order against the beneficiary for support or maintenance." If you son's ex-spouse has a judgment for either child support or spousal support, she will be able to obtain "an order attaching present or future distributions" from the trust. I hope the foregoing has been helpful. Please seek further advice for a local attorney.

2 comments:

Unknown said...

This is very helpful. I've been helping my mother get things set up with her will and testament. I am not an attorney or paralegal or anything like that, but I'm trying to find out as much as possible to help her. I know that sounds selfish of me, but I'm hoping that it will help my siblings more than me. I'm going to have to find out if there is anything like this that will work where she lives.
-Seamus | http://www.detailedparalegalservices.com/Last-Will-Testament/

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