Does a Trust Protect Your Assets from Lawsuits?

When you think about safeguarding your hard-earned wealth, the question of whether a trust can shield your assets from lawsuits naturally arises. At the Law Office of Cameron H.P. White, P.A., we understand that protecting your legacy is just as much about building peace of mind for you and your family.

With a unique combination of business law expertise and creative legal problem-solving, our team is dedicated to putting you in the strongest position possible. Cameron White brings a background in business and law, ensuring a deep understanding of asset protection, while our paralegal Ashley Rusciano’s fresh perspective enables us to craft personalized strategies tailored to each client’s needs.

So, can a trust really protect your assets from lawsuits? Let’s break it down.

Types of Trusts and Their Effectiveness in Florida

Not all trusts serve the same purpose. Some focus on protecting your assets, while others are designed for managing your estate or avoiding probate. Here’s a breakdown of how different types of trusts work in Florida:

Revocable Living Trusts

These trusts are often chosen for their flexibility, allowing you to modify or revoke them during your lifetime. However, in Florida, they provide little to no protection against lawsuits. Assets in a revocable trust aren’t protected from creditors because you still control them. The main benefit of a revocable trust is that it helps your estate avoid probate and makes asset management easier.

Irrevocable Trusts

Irrevocable trusts, on the other hand, can offer more robust protection. By transferring ownership of your assets to an irrevocable trust, those assets are no longer considered your personal property, making it harder for creditors to seize them. In Florida, self-settled irrevocable trusts have limited protection under the law, so structuring them correctly is crucial to ensure they work as intended.

Spendthrift Trusts

Spendthrift trusts protect assets from a beneficiary’s creditors. They limit the beneficiary’s ability to transfer their interest in the trust, keeping the assets safe from creditor claims. However, self-settled spendthrift trusts—where you’re both the creator and beneficiary—don’t offer the same level of protection under Florida law.

Florida’s Stance on Asset Protection Trusts

Florida’s laws strongly limit the effectiveness of self-settled asset protection trusts. If you set up a trust for your own benefit, creditors can still access those assets. This reflects the state’s focus on protecting creditor rights. However, there are other strategies and trust structures that can still provide protection when set up correctly.

How Trusts Offer Protection (When Done Right)

A properly structured trust can be a powerful tool for protecting assets. Here’s how they work:

Separation of Ownership: When you place assets into an irrevocable trust, they are no longer legally considered your personal property. This separation can deter creditors.

Examples in Action: Picture a business owner dealing with a lawsuit. Assets in a properly structured irrevocable trust are usually protected, offering financial security. Likewise, personal assets like investments or vacation homes can be shielded by transferring them into the right type of trust.

The key lies in working with a knowledgeable legal team to ensure your trust is structured according to Florida’s specific rules and policies.

Alternative Asset Protection Strategies in Florida

Trusts aren’t the only way to shield your wealth. Florida offers several other legal mechanisms to protect your assets:

Homestead Exemption

Florida’s Constitution provides one of the strongest homestead exemptions in the country, protecting your primary residence from most creditors.

Tenancy by the Entirety

For married couples, this form of joint ownership offers protection against individual creditors. Only creditors of both spouses can claim assets held this way.

Business Entities

Creating a limited liability company (LLC) or corporation can help protect personal assets from business-related liabilities.

Florida Asset Protection Trust (iPug™ Trust)

These specialized trusts can help with Medicaid eligibility and offer tax benefits while protecting assets. However, careful planning is essential to ensure they comply with Florida law.

Limitations and Considerations

While trusts and other strategies can be effective, it’s important to understand their limitations:

Fraudulent Transfer Laws

Transferring assets to a trust with the intent to defraud creditors is illegal. Courts can reverse such transfers, leaving your assets vulnerable.

Timing

Asset protection is most effective when done proactively. Trying to shield assets after legal trouble arises is often too late.

Exceptions

Certain debts, like child support, alimony, and taxes, may still be collected from trust assets, regardless of how they’re structured.

Protecting Your Future: Contact the Law Office of Cameron H.P. White, P.A.

At the Law Office of Cameron H.P. White, P.A., we believe that protecting your wealth is about more than just paperwork—it’s about securing your peace of mind. Whether you’re a business owner, a family leader, or simply someone who values their hard work, we’re here to help you make informed, proactive decisions about your financial future.

Ready to explore your options? Call us at (407) 792-6011 or fill out the contact form on our Contact Us page. Let’s create a plan that ensures your assets are safe, your legacy is secure, and your future is bright.