Spendthrift Trusts vs. Discretionary Trusts in Tampa

Two of the most common types of trusts in Tampa are discretionary trusts and spendthrift trusts. Not only are they common, but they are also very similar. In fact, to some, they might seem completely interchangeable. However, an experienced estate planning attorney in Tampa can explain their various differences and similarities, allowing you to choose an option that best suits your needs.

The Similarities Between Spendthrift and Discretionary Trusts in Tampa

Let’s start with the similarities between these two trusts. Both discretionary and spendthrift trusts can help families achieve the same general goals, even though they might accomplish these goals in different ways.

Most people choose these trusts to avoid the dissipation or “wasting” of the wealth they leave behind. Perhaps you’re concerned that your loved one is too financially irresponsible to manage their inheritance. Maybe you worry that they lack the knowledge to manage the complex investments you leave behind. Another common concern involved beneficiaries who struggle with substance abuse, gambling addictions, and other issues that can drain money very quickly.

Both of these trusts can protect beneficiaries against these losses, allowing them to experience long-term financial stability.

Spendthrift Trusts Have Stricter Rules

Perhaps the most obvious distinction of a spendthrift trust is the involvement of more specific rules. The “instructions” of a spendthrift trust stipulate that the trustee must distribute a certain amount of money to the beneficiary at certain intervals. There is very little wiggle room in this regard, which makes spendthrift trusts less flexible. However, you might also argue that the funds reach the beneficiaries in a more reliable, predictable manner.

Discretionary Trusts Offer More Control

In contrast, discretionary trusts offer more control. The clue is in the name, and trusts can distribute funds at their discretion. If the trustee is concerned that a distribution might be unwise, they can hold that money until a more appropriate time. For example, a beneficiary might relapse after completing rehab. In this situation, a distribution might fuel their addiction.

A trustee might also prevent distributions if they believe that creditors could intercept the trust assets. Finally, they could offer assistance in different ways – perhaps by covering the beneficiary’s rent instead of offering them cash. Many observers believe that discretionary trusts offer more asset protection.

Which Option is Right for Me?

At the end of the day, online research alone is not enough to determine the best choice. To make an informed decision, consider discussing your unique circumstances, goals, and priorities with an experienced estate planning attorney.

Should I Hire an Experienced Estate Planning Lawyer for Trusts in Seminole?

If you’re trying to choose between discretionary trusts and spendthrift trusts in New Port Richey, you might benefit from legal advice. Estate planning lawyers can explain the differences and similarities between these trusts in more detail. In addition, they can help you decide which option is most appropriate based on your unique estate planning goals. Contact Knudsen Law today to continue this conversation in more detail.

Sources: 

leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0700-0799/0736/Sections/0736.0504.html

leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0700-0799/0736/Sections/0736.0502.html