How to Protect Your Child’s Inheritance from Divorce, Creditors, and Lawsuits

The Short Answer

Inherited money receives no special protection once your child owns it. A creditor with a judgment can garnish an inherited account or levy inherited investments like any other property, and a divorce can reach whatever the inheritance has been mixed into. The same money held in a continuing trust is owned by the trust rather than by your child, and Florida statutes bar creditors from reaching it or forcing a payout. The difference, risk by risk, looks like this.

One more thing belongs in the short answer. Florida refuses this protection to anyone who builds a trust for themselves. Under Fla. Stat. §736.0505, your own creditors can reach whatever your own trustee could pay you. The strongest protection available under Florida law is the kind only the generation ahead can build, which is why the planning happens in your documents rather than in your child’s.

Is an Inheritance Marital Property in Florida?

It starts out nonmarital. Fla. Stat. §61.075(6)(b) puts assets acquired by gift, bequest, devise, or descent outside the marital estate. In practice the label fails constantly, for a reason that has nothing to do with the statute. People deposit money into the accounts they already use. A Florida appeals court held that inherited funds deposited into a joint account are presumed a gift of half to the spouse. Another held that once marital earnings are mixed into an inherited account, the whole account loses its separate character, because money is fungible. Your child would have to keep the inheritance in a solely titled account, forever, and never run a marital dollar through it.

A trust ends the discipline problem, because the assets are never your child’s property in the first place. In Nelson v. Nelson, 206 So. 3d 818 (Fla. 2d DCA 2016), the court held a divorce court has no power to reach or divide assets held in a trust, even where the beneficiary’s spouse wanted them counted. New Jersey’s Supreme Court went a step further in Tannen v. Tannen and held a wife’s interest in a discretionary family trust could not even be treated as her asset when setting alimony. Florida courts can consider a history of steady distributions when setting support, so a trustee with real discretion matters, and that is a drafting choice we make deliberately.

How a Trust Protects an Inheritance

Two provisions do the work, and both are statutory in Florida.

1. The spendthrift clause. Fla. Stat. §736.0502 makes a properly worded spendthrift provision binding, so your child cannot pledge or assign the trust interest and a creditor cannot reach it, or reach any distribution, before your child actually receives it. Money the trustee pays directly to a landlord, a school, or a hospital is never received by your child at all, which is why well-run trusts pay bills rather than write checks to beneficiaries under pressure.

2. Trustee discretion. Fla. Stat. §736.0504 says a creditor cannot compel a distribution that is subject to the trustee’s discretion and cannot attach the interest your child might receive. Florida counts a distribution standard of health, education, maintenance, and support as discretionary, so the statute protects the common family design where a responsible adult child is trustee of his own share within that standard. Sections 736.0504(3) and 736.0814(2) set the limits for that arrangement by statute.

The Florida courts have tested this design. In Miller v. Kresser, 34 So. 3d 172 (Fla. 4th DCA 2010), a creditor attacked a trust where the trustee had approved everything the beneficiary asked for, and the court protected the trust anyway, because the terms of the trust control rather than the trustee’s habits. The lesson runs both ways. Good terms survive sloppy administration, and bad terms cannot be saved by good behavior. The pages on the Florida spendthrift trust and the Florida irrevocable trust cover the two building blocks in more depth.

The Five Mistakes That Break the Protection

Most protective trusts that fail were broken at the drafting table years earlier. Five choices account for most of the damage.

1. Payouts at set ages. A schedule paying a third at 30, a third at 35, and the rest at 40 converts protected trust assets into exposed personal assets on a timetable fixed before anyone knew what your child’s life would look like. Florida law makes an overdue mandatory distribution reachable by creditors under §736.0506(2). The distribution date arrives on schedule whether your child is mid-lawsuit or mid-divorce that year. A lifetime trust share avoids the problem entirely.
2. An open-ended power to pay himself. A child-trustee who can distribute freely to himself holds something close to ownership, and creditors argue exactly that. Keep the self-distribution power inside the health, education, maintenance, and support standard, and bring in an independent trustee for anything beyond it.
3. A clause that forfeits instead of restrains. A spendthrift provision must block transfers. A clause that cancels the beneficiary’s interest when a creditor appears is a different animal, and a Florida bankruptcy court held in 2021 that the forfeiture style is no spendthrift clause at all.
4. Distributions parked in joint accounts. The trust protects what stays in it. A distribution your child deposits into the marital checking account becomes presumptively half the spouse’s under the commingling cases above. We put that warning in writing to every beneficiary.
5. Naming yourself. Add yourself to the beneficiary class and the trust becomes self-settled, and §736.0505 hands your creditors everything the trustee could pay you. Protection for assets you keep in your own name is a different project, covered on the asset protection trust page.

Bankruptcy, Lawsuits, and the Honest Limits

Bankruptcy is where trust drafting faces its hardest audience, and the design above holds. Federal law excludes from the bankruptcy estate any trust interest protected by a transfer restriction that is enforceable under state law, which the Supreme Court confirmed in Patterson v. Shumate, 504 U.S. 753 (1992). A Florida bankruptcy court applied that rule to a father-built spendthrift trust in In re Ciano, 433 B.R. 431 (Bankr. N.D. Fla. 2010), and kept the trust out of the son’s Chapter 7 entirely. The trusts that lose in the reported cases were self-settled, gave the beneficiary express control, or carried the forfeiture-style clause described above.

Two limits are permanent, and you should hear them from us rather than discover them later. First, money already distributed is your child’s money, reachable like any other asset, which is why the trustee’s power to pay expenses directly matters. Second, a former spouse or a child with a support order can garnish distributions as the trustee makes them. Florida’s courts allowed exactly that in Berlinger v. Casselberry, 133 So. 3d 961 (Fla. 2d DCA 2013). Careful design manages that exposure. Nothing eliminates it, and anyone who tells you otherwise is selling something.

How Long the Protection Can Last

Florida lets a trust created today run for up to 1,000 years under Fla. Stat. §689.225, among the longest terms in the country. The protection renews at each generation because every new share is again a trust someone else created for its beneficiary. Your grandchildren hold the same protection your children did, and our guide to a trust for grandchildren covers how their shares are set up. Families sometimes shop states for this, and the honest comparison is short. South Dakota allows a perpetual trust, Nevada allows 365 years, and Delaware limits directly held real estate to 110 years. Florida’s 1,000 years, its lack of a state income tax, and its own decanting statute mean a Florida family rarely has a reason to look elsewhere. The Florida dynasty trust page covers the multi-generation design, and the federal generation-skipping exemption ($15 million per person in 2026) handles the estate-tax side for the families large enough to need it.

What This Costs

The protection is drafting rather than a separate product. In a trust-based estate plan, the protective provisions live inside your revocable living trust and take effect when the trust divides into your children’s shares. Our trust-based plan is a flat $3,200 for an individual and $4,500 for a couple, including a pour-over will, powers of attorney, health-care directives, and one funding deed. Spendthrift and minors’ provisions are a $750 add-on. Recording and other government costs are additional and passed through at cost. A multi-generation dynasty design is custom work quoted at the consult. See the full fee schedule for everything else.

Frequently Asked Questions

Common Situations

The couple with two adult sons. Their home and savings would pass outright under their old wills. We rebuilt the plan as a joint trust with lifetime shares for each son, each son as trustee of his own share within the support standard, and an independent trustee ready to step in if a lawsuit or divorce ever appears. The house reaches the trust through a lady bird deed, so nothing changes during the parents’ lives.

The daughter in a difficult marriage. Her parents were about to leave her $400,000 outright. We moved her share into a lifetime trust instead. If the marriage fails, the trust is never on the table in the divorce, and she did not have to police a separate account for twenty years to keep the protection.

The physician son. One child carries real malpractice exposure. His share stays in trust with an independent trustee holding the distribution power, the trustee pays expenses directly when anything is pending, and his inheritance is not part of any plaintiff’s calculation.

Sources of Law

• Fla. Stat. §61.075(6)(b): inheritance is a nonmarital asset; commingling can convert it. (retrieved 2026-08-26)
• Fla. Stat. §§736.0502 to 736.0506 (annotated): spendthrift provisions, discretionary trusts, creditor limits, and the mandatory-distribution exception. §736.0505 (annotated): self-settled trusts get no protection. §736.0814 (annotated)(2): limits on a trustee-beneficiary. (retrieved 2026-08-26)
• Fla. Stat. §689.225: trust duration up to 1,000 years for trusts created on or after July 1, 2022. (retrieved 2026-08-26)
• 11 U.S.C. §541(c)(2): a spendthrift interest enforceable under state law stays out of the bankruptcy estate; Patterson v. Shumate, 504 U.S. 753 (1992).
• Cases: Miller v. Kresser, 34 So. 3d 172 (Fla. 4th DCA 2010); Nelson v. Nelson, 206 So. 3d 818 (Fla. 2d DCA 2016); Lakin v. Lakin, 901 So. 2d 186 (Fla. 4th DCA 2005); Pfrengle v. Pfrengle, 976 So. 2d 1134 (Fla. 2d DCA 2008); In re Givans, No. 6:19-bk-01928 (Bankr. M.D. Fla. 2021); In re Ciano, 433 B.R. 431 (Bankr. N.D. Fla. 2010); Berlinger v. Casselberry, 133 So. 3d 961 (Fla. 2d DCA 2013); Tannen v. Tannen, 208 N.J. 409 (2011) (persuasive out-of-state authority).

Updated on August 26, 2026. Reviewed by Kevin D. Klagge, Esq., Fla. Bar No. 99502. Attorney Kevin Klagge represents families, businesses, and international clients in estate and tax planning, business structuring, and international law, with a focus on Florida legal tools. He litigates estate and business issues in court. General information about Florida and federal law, not legal advice, and no attorney-client relationship is created. Outcomes depend on your facts; nothing here is a guarantee. Do not send confidential information until we have agreed to represent you.