Florida Irrevocable Trusts: What They Actually Protect — and What They Don’t
Most of what is written about asset protection trusts in Florida oversells them. The Florida Trust Code is specific about how far a trust can shield property from the person who created it, and the answer is narrower than the marketing suggests. This page sets out what the statute actually says.
Does an irrevocable trust protect your assets from creditors in Florida?
Only to the extent you cannot benefit from it. §736.0505 is the controlling provision, and it draws the line in one sentence: with respect to an irrevocable trust in which the settlor is a beneficiary, “a creditor or assignee of the settlor may reach the maximum amount that can be distributed to or for the settlor’s benefit.”
Read that carefully. It is not about what the trustee has distributed. It is about what the trustee could distribute. If your trust permits distributions to you in the trustee’s discretion, your creditors stand in that same position — and the protection is gone.
The same section confirms that the property of a revocable living trust is subject to the claims of your creditors during your lifetime. A revocable trust is an excellent probate-avoidance tool. It is not an asset protection tool at all.
Is Florida a domestic asset protection trust state?
No. A number of states have enacted domestic asset protection trust legislation allowing a settlor to create a self-settled spendthrift trust that is shielded from their own creditors. Florida has not. §736.0505 is the reason. If you have been advised to set up a self-settled Florida trust for creditor protection, ask specifically which statute is said to protect it.
What does work in Florida is different, and often stronger: constitutional homestead protection, statutory exemptions for annuities and life insurance, tenancy by the entireties for married couples, and retirement accounts. Those protections come from other parts of Florida law, not from the trust itself.
What is the difference between a revocable and an irrevocable trust in Florida?
A revocable trust you can amend or revoke at any time; you keep full control, and in exchange you keep full exposure. An irrevocable trust gives up that control, and it is the giving up of control — not the label on the document — that produces whatever protection or tax treatment follows. Our revocable living trust page covers the revocable side in detail.
Can you change or terminate an irrevocable trust in Florida?
More often than the name implies. Florida has a decanting statute, §736.04117, which lets an authorised trustee with power to invade principal appoint that principal in favour of the trustee of one or more other trusts for the benefit of the same beneficiaries. In practice this is how outdated irrevocable trusts get modernised without going to court.
The statute has real guardrails:
- Only beneficiaries of the original trust may benefit from the new one
- Vested interests cannot be reduced
- The exercise cannot jeopardise federal tax benefits originally claimed, transfer S corporation stock to an ineligible shareholder, or shorten a retirement-account distribution period
- A trustee cannot use it to increase their own compensation or reduce their own liability
- Written notice must go to all qualified beneficiaries, the settlor, and any co-trustees at least 60 days before the power is exercised, unless everyone waives that period in writing
The statute also expressly permits decanting into a supplemental needs trust where a beneficiary’s government benefits are at stake.
What is a Medicaid asset protection trust in Florida?
An irrevocable trust designed so that transferred assets are no longer countable for Medicaid long-term care eligibility. It works only if you genuinely give up access — which is the same principle as §736.0505, applied to a different creditor.
The timing is what defeats most people. Florida applies a 60-month look-back period: transfers made in the five years before an application are scrutinised and can trigger a penalty. A trust created the month before a nursing home admission does not work. One created six years earlier may.
What is a qualified income trust (Miller trust) in Florida?
A narrow, specific fix for one problem: too much income. Florida’s nursing home Medicaid programme applies an income cap, and an applicant over it is ineligible no matter how modest their assets. A qualified income trust — commonly called a Miller trust — takes the excess income each month so the countable figure falls below the cap.
2026 figures for a single applicant to Florida’s Institutional Care Program: an income limit of $2,982 per month and a countable asset limit of $2,000. These are adjusted annually, so confirm the current numbers before relying on them. Florida must also be named to receive whatever remains in the trust when the recipient dies.
What is a Florida community property trust?
A 2021 addition to the Trust Code. §736.1501 names this part the Community Property Trust Act (ch. 2021-183), and it lets a married couple in a non-community-property state opt into community-property treatment for assets held in the trust. Under §736.1503 a valid one requires:
- At least one qualified trustee — though one or both spouses may also serve
- Signature by both settlor spouses, with the execution formalities the Trust Code requires
- A specific warning, in capital letters, about the consequences for creditor rights and for each spouse’s rights during marriage and on divorce, recommending that each spouse obtain independent counsel
That mandatory warning is there for a reason. Converting separate property into community property changes what each spouse owns, including in a divorce. Couples usually consider these trusts for the federal income-tax basis treatment of community property on the first death — a question to put to your CPA on your specific numbers, not one to decide from a web page.
How much does an irrevocable trust cost in Florida?
More than a revocable trust, because the drafting decisions are irreversible. The cost is not really in the document; it is in getting the distribution standard, the trustee powers and the tax treatment right the first time, since the whole point of the structure is that you cannot simply amend it later. Decanting under §736.04117 exists precisely because so many irrevocable trusts were drafted without that care.
Who should be trustee of an irrevocable trust in Florida?
Almost never you. If you retain the power to distribute trust property to yourself, §736.0505 hands your creditors the same reach, and for Medicaid and estate-tax purposes the retained control can undo the transfer entirely. An independent trustee — a professional fiduciary, a corporate trustee, or a trusted person with no beneficial interest — is usually what makes the structure hold.
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