The Limitations of Florida Asset Protection Trusts & The Best Strategy

Florida is often seen as an asset protection-friendly state, thanks to its strong homestead exemption and favorable laws for certain assets. However, when it comes to asset protection trusts, Florida investors, business owners, and high-net-worth individuals may be surprised to learn that Florida does NOT allow self-settled asset protection trusts.

Many Floridians mistakenly believe that a Florida-based irrevocable trust will protect their assets—but in reality, Florida law does not recognize domestic asset protection trusts (DAPTs), leaving assets vulnerable to lawsuits and creditor claims.

This article explains:

✅ Why Florida trusts do not offer the asset protection you might expect

✅ How choice-of-law conflicts can expose your wealth

✅ The best alternative to a Florida trust: The Bridge Trust®

🚨 Florida Trusts Do Not Offer Full Asset Protection

Many investors and professionals believe that Florida’s asset protection laws extend to trusts—but this is a common misconception.

🔹 What Florida Trusts CAN Do:

✔ Provide estate planning benefits (e.g., avoiding probate).

✔ Protect assets for heirs (not for the grantor).

✔ Reduce estate taxes in some cases.

🚨 What Florida Trusts CANNOT Do:

🚫 Protect assets from lawsuits if you are the beneficiary.

🚫 Shield wealth from creditors (if you maintain control).

🚫 Serve as a valid Domestic Asset Protection Trust (DAPT).

📌 Key Legal Fact: If you can access the assets in a Florida trust, so can your creditors.

💡 Lesson: Florida trusts work for estate planning—not asset protection.

🚨 Florida Law Does Not Recognize Self-Settled Trusts

Unlike Nevada, South Dakota, and Delaware, Florida does not allow self-settled spendthrift trusts—meaning you cannot create a trust to protect your own assets.

🔹 Why This Matters:

🚫 If you create a Florida trust and name yourself as a beneficiary, courts will ignore it.

🚫 A judge can force you to distribute assets to pay creditors.

🚫 Even if the trust is irrevocable, if it benefits you, it won’t hold up in court.

📌 Case Law Example: Menotte v. Brown (In re Brown), 303 F.3d 1261 (11th Cir. 2002)

• The court ruled that Florida trusts created to shield assets from creditors are unenforceable.

• Lesson: Florida trusts will not protect assets from legal judgments.

📌 Another Case: Barbee v. Goldstein (In re Reliance Fin. & Inv. Group, Inc.) (2006)

• Reinforced that Florida does not recognize self-settled spendthrift trusts.

• Lesson: If your trust benefits you, it’s not protected under Florida law.

💡 Key Takeaway: If you own rental properties, businesses, or significant investments in Florida, a domestic asset protection trust will not shield your wealth from lawsuits.

🚨 Choice-of-Law Conflicts: Florida Courts Will Apply Florida Law

Some Florida investors try to set up an out-of-state or offshore trust to bypass Florida’s restrictions. However, Florida courts have a history of ignoring foreign trust laws and applying their own statutes.

📌 Case Law Example: In re Rensin (U.S. Bankruptcy Court, S.D. Florida, 2019)

• A Florida resident established a trust under Belizean law for asset protection.

• The court ruled that Florida law overrides foreign trust provisions.

• Lesson: Even if you establish a trust in a different state or country, Florida courts may disregard it.

💡 Key Takeaway: Florida residents cannot rely on out-of-state laws to protect assets—Florida courts will apply Florida law.

🚨 The Best Asset Protection Strategy for Florida Investors: The Bridge Trust®

After realizing the weaknesses of Florida trusts, many investors turn to the Bridge Trust®, a hybrid asset protection trust that provides stronger legal protection while remaining IRS-compliant.

✅ Why The Bridge Trust® Works

✔ Legally Registered Offshore – Cook Islands trust law offers the strongest asset protection available.

✔ Starts as a U.S. Grantor Trust – Ensures IRS compliance while assets remain under your control.

✔ Shifts Offshore If Threatened – When lawsuits arise, the trust transitions offshore, making it extremely difficult for creditors to access assets.

✔ Protects Against Fraudulent Transfer Claims – The trust exists before legal threats, preventing courts from reversing asset transfers.

🚀 How The Bridge Trust® Provides Superior Protection

🔹 1. Proactive Legal Structure

Unlike standard Florida trusts, the Bridge Trust® is pre-positioned offshore. This means that in normal conditions, it functions as a domestic trust, but if a lawsuit or creditor claim arises, it seamlessly transitions to an offshore jurisdiction where U.S. courts have no authority.

🔹 2. Trust Protector Oversight

A Trust Protector—an independent third party—ensures that the transition offshore is not automatic, making the structure legally sound and more defensible against legal challenges.

🔹 3. Offshore Protection From Creditors

Once transitioned offshore, the Bridge Trust® benefits from:

✔ Strict Cook Islands trust laws that favor asset protection.

✔ Short statutes of limitations for creditor claims.

✔ High legal burdens of proof that make it nearly impossible for creditors to seize assets.

📌 Example: If a creditor wins a $2M lawsuit against you in Florida, they cannot enforce it in the Cook Islands, where the Bridge Trust® is registered.

💡 Lesson: The Bridge Trust® is the only structure that combines domestic compliance with offshore strength.

🚀 Final Takeaways: Florida Trusts vs. The Bridge Trust®

✅ Florida revocable trusts do NOT protect assets from lawsuits.

✅ Florida irrevocable trusts only protect heirs—not the grantor.

✅ Florida does NOT allow self-settled spendthrift trusts (DAPTs).

✅ Florida courts will override foreign trust laws to apply their own statutes.

✅ The Bridge Trust® is the best solution for protecting Florida-based assets.

📌 What You Should Do Next:

1️⃣ Review your current asset protection plan – Are your assets at risk?

2️⃣ Understand that Florida trusts alone won’t protect you.

3️⃣ Use the Bridge Trust® for real security – Combining domestic compliance and offshore strength ensures maximum protection.

📌 Don’t wait until a lawsuit strikes—take action now to safeguard your wealth.