Asset Protection Trusts in Florida: What Actually Works

The Short Answer

The trust most people picture, a domestic asset protection trust (DAPT) that you create, benefit from, and still keep away from your own creditors, does not exist in Florida. Florida follows the traditional rule. If you can reach the assets, so can your creditors. About twenty states allow DAPTs; Florida is not one of them. The upside is that Florida already gives residents some of the strongest built-in asset protection in the country, so most people do not need a special trust at all.

What Actually Protects Your Assets in Florida

• Unlimited homestead on your primary residence (no dollar cap, unlike most states).
• Tenancy by the entirety for married couples, shielding jointly held property from one spouse’s creditors.
• Statutory exemptions for retirement accounts, annuities, life insurance, and head-of-household wages.
• Multi-member LLCs (charging-order protection) for rental and business assets.
• Irrevocable trusts for assets you are genuinely willing to give up control of, the same structure used in Medicaid planning.

A real plan layers these. For many Floridians, the homestead and exemptions alone protect more than a DAPT would elsewhere.

Practice pointer. Before I discuss any trust, I list what the owner holds and how each item is titled, because a brokerage account in one spouse’s name or a rental held in the owner’s own name stays exposed even inside a plan that looks protected on paper.

What About a Nevada or Delaware DAPT?

You can set up another state’s DAPT, but it is uncertain whether a Florida court would honor it against a Florida creditor, because conflict-of-laws rules may apply Florida’s policy instead. An out-of-state DAPT is not a guaranteed shield for a Florida resident, and it adds a trustee in the other state and a second set of annual fees. An offshore trust is the more aggressive version of the same idea, and usually overkill. We give you a straight assessment rather than sell you a trust you may not need.

Practice pointer. When I review a Nevada or Delaware trust for a Florida resident, the first thing I read is who the trustee is and what the settlor can still direct, because a Florida court that applies Florida policy will ask the same question the statute asks, which is how much of the money the trustee could hand back to the person who put it in.

The Catch: Timing

Whatever the tool, it has to be in place before a claim arises. Florida’s fraudulent-transfer law lets creditors unwind transfers made to dodge an existing or foreseeable debt, so protection set up after a lawsuit looms can be undone. Done early, the layers hold. See the full asset-protection picture →

Can I Put My Money in a Trust After I Have Been Sued?

Moving money into a trust after you have been sued does not protect it, because Florida’s fraudulent transfer law lets a creditor undo a transfer made with intent to hinder, delay or defraud, and the statute tells a judge to weigh whether the debtor had already been sued or threatened with suit when the money moved. The question I get most about this is, “Is it too late to protect anything now that I have been sued?” The honest answer is that some steps remain lawful, such as using exemptions you already have, and our page on whether it is too late to protect assets works through them. A new trust funded that week is the step that usually makes the case worse.

Florida’s statute lists eleven signs a judge may consider. Two of them are ordinary facts in a family’s life, a transfer to a relative or to a company the owner controls, and a transfer made shortly before or after a large debt, which is why the timing matters more than the paperwork.

What the Statute Actually Says

All of the above traces back to one provision, Fla. Stat. 736.0505, and it is worth reading rather than taking anyone’s word for. Section 736.0505 provides that the property of a revocable trust is reachable by the settlor’s creditors during the settlor’s lifetime, and that with an irrevocable trust a creditor of the settlor may reach the maximum amount that can be distributed to or for the settlor’s benefit. The word can is the whole ballgame. If the trustee could hand you everything, a creditor stands where you stand. No Florida appellate court has ever construed that section, but Florida’s federal courts have, including a 2019 decision refusing to apply Belize law to a Belize trust and holding its assets were never protected from execution under Florida law. Our annotation of section 736.0505 sets out the statute in full and quotes those decisions, along with two carve-outs that cut the other way, the tax-reimbursement rule in paragraph (1)(c) and a spousal-trust provision added in 2022.

Frequently Asked Questions

Common Situations

The physician. A doctor fears a malpractice judgment and wants an asset protection trust. We show that her homestead, retirement accounts, and a properly structured practice entity already protect most of what she has, no DAPT needed, and layer the rest.

The out-of-state trust that may not hold. A Florida resident set up a Nevada DAPT online. We flag that a Florida court may not honor it against a Florida creditor, and build a Florida-law structure that is more reliable for him.

The inheritance left in trust. A widow plans to leave her estate to her son, whose construction business could fail and take his savings with it. Florida’s rule only blocks protecting yourself with your own trust; a trust you create for someone else is a different story. By leaving his inheritance in a trust with a spendthrift clause (a provision that keeps a beneficiary’s creditors from reaching trust assets before they are paid out), what stays in the trust is generally beyond the reach of his business creditors. She protects him in a way he could never protect himself.

Sources of Law

• Fla. Stat. §736.0505 (a self-settled trust’s assets remain reachable by the settlor’s creditors, so Florida is not a DAPT state). Florida exemptions: Art. X §4 (homestead); §222.11 (wages), §222.13/.14 (life insurance, annuities), §222.21 (retirement). Fraudulent transfers: ch. 726, including the badges of intent in §726.105(2)(a) to (k), and the creditor’s remedies in §726.108; fraudulent asset conversion into exempt property, §222.30. (retrieved 2026-06-08; §726.105 re-read 2026-10-15)
• Yusem v. South Florida Water Management District, 770 So. 2d 746 (Fla. 4th DCA 2000) (a 1996 judgment of $224,695.42 at 10% a year; a $244,701.11 malpractice settlement wired into an entireties account on April 9, 1998, and $210,000 sent the same day to an offshore trust account in the husband’s name; the trial court’s four badges of fraud; reversed because the wife was neither debtor nor transferee and because ch. 726 reaches the transfer or the transferee rather than supplying a second judgment against the same debtor). Opinion text read in full 2026-10-15.

What I See When the Trust Comes After the Judgment

I see cases where a judgment has sat unpaid for a year or two, money then arrives from somewhere else, and the owner’s first instinct is to move it before the creditor hears about it. The money is usually a settlement, an inheritance or the proceeds of a sale, and the transfer is usually made the same week it lands, which is the week a judge will later look at hardest.

A Florida case from 2000 shows the shape exactly. A man owed a state water management district $224,695.42 on a 1996 judgment for a permit violation, and the judgment carried interest at 10% a year. In April 1998 he settled a legal malpractice claim of his own for $244,701.11. His lawyers wired the settlement into the joint account he held with his wife as tenants by the entirety (the form of married ownership that keeps property away from one spouse’s creditors), and on the same day he sent $210,000 of it to an offshore trust account in his own name. At trial he said all of it had been lost in a foreign currency investment, and he could not recall the details. The trial judge found four of the statute’s warning signs in that single day, including a transfer to an insider while the judgment was outstanding.

The turn was the joint account. The appeals court found the money had sat there only momentarily, without his wife’s knowledge, on its way to the offshore account, so the account protected nothing and his wife owed nothing. The cost was the judgment itself, which kept growing by about $22,470 a year. The settlement would have paid it in full that April and left $20,005.69 over, and the interest would have stopped the day it was paid.

Practice pointer. When money arrives while a judgment is open, I read the judgment before I discuss any trust, because settling or paying it from the new money is often the cheapest protection the owner has, and a structure built that week matches the statute’s list of warning signs line by line.

Avoid routing a settlement or an inheritance through a joint account on its way somewhere else. A same-day transfer to an account in one spouse’s name is the record a creditor’s lawyer reads first, and it leaves the money neither protected nor available to end the debt.

An honest limit belongs here, because the creditor did not win everything. The appeals court threw out the extra $210,000 judgment the trial court had entered against both spouses, reasoning that a fraudulent transfer suit lets a creditor chase the transferred money or the person who received it and does not create a second debt against the same debtor. So the owner was not made to pay twice. He also never got free of the first judgment, and nothing in the opinion tells us whether the district ever collected it.

Kevin D. Klagge, Esq., admitted in Florida since 2012. General information rather than advice on your situation.

Updated on October 15, 2026. Reviewed by Kevin D. Klagge, Esq., Fla. Bar No. 99502. General information about Florida law, not legal advice, and no attorney-client relationship is created. Asset protection must be planned before a claim arises and depends on your facts; no result is guaranteed. Do not send confidential information until we have agreed to represent you.