What Is a “Self-Settled” Trust in Tampa?

If you’re planning to create a trust in Tampa, you are spoiled for choices. All kinds of different trusts are available, and one option that might have crossed your path is a “self-settled trust.” What exactly does this phrase mean, and is it the right choice for you? Are these trusts even legal in Florida? These are questions you may wish to explore with an experienced Tampa estate planning attorney.

A Self-Settled Trust Allows You to Be the Beneficiary of Your Own Trust

In a self-settled trust, the grantor (the person who created the trust) also acts as the beneficiary. In this situation, the trust may take the form of a “domestic asset protection trust” (DAPT). However, this is not the only situation in which a grantor might be a beneficiary of a trust.

If you create a revocable living trust, you might also fulfill the duties of the trustee while also playing the role of the primary beneficiary. In fact, this type of structure is quite common in Florida.

Technically speaking, only DAPTs are “self-settled.” This is because even though you can act as a beneficiary for both a revocable living trust and a DAPT, only the latter offers creditor protection benefits. The “settled” aspect of a DAPT refers specifically to asset protection and grantors acting as beneficiaries. In contrast, a revocable living trust lets you act as your own beneficiary but with little to no asset protection advantages.

Self-Settled Trusts Are Not Valid in Florida

Before you get too invested in the idea of a self-settled trust, you should know that Florida does not recognize these estate planning tools. If you try to create a DAPT under Florida state law, your trust will be unenforceable. That being said, you may be able to create an international self-settled trust or a DAPT in another state.

Revocable Living Trusts Are Still Valid Estate Planning Tools

Even though they might not offer the same kind of asset protection qualities as a DAPT, revocable living trusts are still entirely valid estate planning tools. If you’re attracted by the idea of acting as both the beneficiary and the trustee, consider discussing revocable living trusts (RLTs) with your estate planning lawyer.

That being said, you should be careful to name a successor trustee in this situation. If you become incapacitated, someone else needs to be ready to fulfil the duties of the trustee in your absence, and it makes sense to choose this individual ahead of time.

Can an Estate Planning Lawyer in Seminole Help Me? 

If you want to learn more about self-settled trusts and related topics, consider continuing this conversation with an experienced estate planning attorney in New Port Richey. These legal professionals can not only explain how self-settled trusts work, but they can also assess your unique situation and determine whether this is the right option for you. Reach out to Knudsen Law today for further guidance.

Sources: 

floridabar.org/the-florida-bar-journal/surprise-you-may-already-be-an-asset-protection-attorney-take-the-quiz-and-find-out/

floridabar.org/the-florida-bar-journal/designing-trust-systems-for-florida-residents-planning-strategies-things-you-should-know-and-traps-for-the-unwary/