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Christopher B, Esq
Christopher B, Esq, Attorney
Category: Estate Law
Satisfied Customers: 2983
Experience:  Litigation Attorney with education focus on estate planning and tax
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I have two daughters and I wish to treat them equally upon

Customer Question

I have two daughters and I wish to treat them equally upon my death. One is responsible and the other is not. I have loaned the irresponsible one money (a great deal of money) which has never been paid back. She has been married 28 years and her husband
spends money as fast as they make it. They also pawn expensive items purchased for very little and then loses the goods because they don't have the money to get it back. What can I add to my trust and pour-over will that will set aside money for her but for
income only and protect her by making it to where he cannot access it. Is there a way to do that? If so, how?
Submitted: 2 years ago.
Category: Estate Law
Expert:  Christopher B, Esq replied 2 years ago.
What state are you from?
Customer: replied 2 years ago.
Expert:  Christopher B, Esq replied 2 years ago.
My name is***** and I will be helping you with your question today. This answer is for informational purposes only and does not create an attorney-client relationship.
Sorry, I got to your question a bit later than I wanted as I was called away to a hearing.
One of the best instruments for this situation would be a spendthrift trust. A trust is a fiduciary arrangement that allows a third party (“Trustee”) to hold assets on behalf of a beneficiary or multiple beneficiaries. Trusts can be written in many ways and can specify exactly how and when the assets pass to the beneficiaries. Trusts provide several benefits, including avoidance of probate and minimization of estate and generation-skipping transfer taxes, but perhaps one of the most important functions trusts serve is to protect beneficiaries from their own improvident spending habits and from creditors. One of the most common provisions in a trust document is a “spendthrift” provision. As you probably know, s spendthrift spends more money than he or she has – but a Settlor (the person creating the trust) can add provisions to the trust document that protect a beneficiary from reckless spending. “Spendthrift Trusts are created with the intention of providing a fund for the maintenance of another, and at the same time securing it against his own improvidence or incapacity for self-protection.” Miller v. Kresser, 34 So.3d 172 (Fla. 4th DCA 2010). The Miller court noted that “a valid spendthrift provision prevents a beneficiary from transferring his or her interest in the trust as well as prevents creditors or assignees of the beneficiary from reaching any of he trust funds until they are dispersed to the beneficiary.” Id.
A recent decision by the Fifth District Court of Appeals illustrates the protection provided by a spendthrift provision. In the recently-decided Zlatkiss v. All America Team Concepts, LLC, 38 Fla. L. Weekly D1194 (Fla. 5th DCA June 7, 2013), Robert and Linda Zlatkiss made a $350,000 loan to Louis Steinmetz, who signed a personal guarantee on the representation that he was the beneficiary of a $6,850,000 trust, which was true. Steinmetz defaulted on the loan and the Zlatkisses sued Steinmetz and Wells Fargo (the trustee); however, it turned out that Steinmetz’s trust is a spendthrift trust, which prevents the trustee from making distributions if the distributions would be available to creditors. “When Steinmetz failed to repay the loan, trustee Wells Fargo refused to make trust distributions to cover the debt owed to the Zlatkisses.” Id. The court noted that “spendthrift provisions have long been recognized as valid in Florida” and Florida Statutes(###) ###-####.0507 provide for the enforcement of spendthrift trusts. Id. Thus, the Zlatkisses were unsuccessful in their attempt to have the trust repay Steinmetz’s debt to them. The end of the Zlatkiss-Steinmetz story sounds patently unfair, but Mr. Steinmetz is going to find himself in the frustrating position of being the beneficiary of a multimillion dollar trust that will not distribute any money to him as long as the judgment validly exists. So, the Zlatkisses can get a judgment against Steinmetz and as long as that judgment is out there Wells Fargo will not make any distribution to Mr. Steinmetz because once it does that distribution can be attached by the Zlatkisses. The only ones who win are Wells Fargo (because it continues to serve as trustee and to collect trustee’s fees) and Wells Fargo’s attorneys (because they get paid by the trust).
The appropriate laws in Florida dealing with this are: CREDITORS’ CLAIMS; SPENDTHRIFT AND DISCRETIONARY TRUSTS (736.0***-***-****) (###) ###-####Spendthrift provision
(1) A spendthrift provision is valid only if the provision restrains both voluntary and involuntary transfer of a beneficiary’s interest. This subsection does not apply to any trust the terms of which are included in an instrument executed before the effective date of this code.
(2) A term of a trust providing that the interest of a beneficiary is held subject to a spendthrift trust, or words of similar import, is sufficient to restrain both voluntary and involuntary transfer of the beneficiary’s interest.
(3) A beneficiary may not transfer an interest in a trust in violation of a valid spendthrift provision and, except as otherwise provided in this part, a creditor or assignee of the beneficiary may not reach the interest or a distribution by the trustee before receipt of the interest or distribution by the beneficiary.
(4) A valid spendthrift provision does not prevent the appointment of interests through the exercise of a power of appointment.
Therefore the provision written into the trust must "restrain both voluntary and involuntary transfer of a beneficiary’s interest". This will help in two ways as the trustee will have the authority to withhold assets for the purposes of the best interests of your daughter and also to protect these assets from creditors. I would not recommend drafting a trust on your own and would contact a local estate planning attorney in Florida in order to draft a trust containing this provision.
There are also certain exceptions provided in(###) ###-#### ***** link:
Please let me know if you have any further questions or require any additional guidance. Please do not forgot to positively rate my answer as this is the only way that I am compensated for my work.
Expert:  Christopher B, Esq replied 2 years ago.
I see that you have viewed my answer. Do you have any further questions? Please remember to positively rate my answer. Thank you!