TRUST ADMINISTRATION RULING LEAVES SOME UNPROTECTED

A new ruling from a Florida appellate court may change the way that ex-spouses are treated during the estate administration process. The ruling, handed down in November, changes the permissions granted to ex-spouses through trust administration. In many cases, wealthy individuals are more likely to set up a trust that is administered by a trustee who doles out cash according to predetermined rules. Now, the children of beneficiaries and ex-spouses may be able to easily access those funds under certain conditions.

Estate planning professionals are still working to determine whether the ruling will establish a formal precedent that could affect the way trusts are administered in other states. The ruling came about after a Florida man sought legal protection from his ex-wife’s attempt to garnish his trust funds when he stopped paying thousands of dollars in monthly alimony. That trust did not distribute money directly to the man, rather it simply paid his bills. In many cases, creditors are prevented from garnishing these funds stolen when the trustee does not hand money to the beneficiary. However, ex-spouses have now been deemed “exception creditors,” allowing them to pursue garnishments of discretionary trusts for parents related to child support and alimony, among other family law requirements.

Although Florida is attractive for older Americans because it does not have income tax or estate tax, this ruling could change the way that Floridians manage their estate plans and trust fund administration. In fact, it may lead to more residents taking precautionary measures to protect their own trusts. Now, Florida has been established as a less-secure financial jurisdiction, because it permits ex-spouses to garnish trusts that were previously considered off-limits. Therefore, existing Florida investors are advised to review their estate plans and determine whether a trust is really the perfect vehicle for achieving their goals.

The legal landscape of the state administration is admittedly dynamic and open to change. This is evidenced by the fact that the state courts handed down this new, more permissive ruling. Those who are concerned about how these trust matters might affect their individual estate plans may benefit from consulting qualified services of a probate attorney, who can help them learn more about their individual options for trust administration.

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Written by Luis E. Barreto

Luis E. Barreto

Luis is a probate and guardianship litigator with over 23 years of experience in the field. Determination of heirs, will contests, breaches of fiduciary duty, removal of personal representatives, guardians and trustees are just some of the types of litigation he addresses. In addition, he administers non-contested estates and guardianships.