Florida Has No Domestic Asset Protection Trust: What Self-Settled Trusts Actually Do Here

Dr. Adebayo's Question: Can He Protect His Own Money in His Own Trust?

Dr. Adebayo is a composite, not an actual client, but his situation is one I hear often in Tampa. He is 52, a surgeon, and he has spent thirty years building a practice, a retirement account, and a taxable investment portfolio. He read an article about asset protection trusts in Nevada and South Dakota and asked a fair question: can he do something similar in Florida, putting his own assets into an irrevocable trust so a future malpractice judgment cannot reach them?

An irrevocable trust, in general, is one the person who creates it cannot simply revoke or amend on his own. That feature is exactly what lets a properly designed irrevocable trust move assets out of someone's estate for creditor, Medicaid, or tax purposes. But the key word is properly designed, and for Dr. Adebayo's specific goal, protecting his own money from his own future creditors, Florida law draws a hard line.

Why a Self-Settled Trust Does Not Protect the Person Who Created It

Florida has never adopted a domestic asset protection trust statute. Several other states have passed laws that let a person create a trust, name himself as a beneficiary, and still shield the trust assets from his own creditors. Florida has deliberately not followed that path, and Florida Statutes Chapter 736, the Florida Trust Code, treats the opposite rule as strong public policy.

Under Florida Statutes section 736.0505(1)(b), if a person creates an irrevocable trust and can benefit from it himself, a creditor can reach the maximum amount that the trustee could distribute to or for that person's benefit. It does not matter how carefully the trust is drafted. A spendthrift clause, fully discretionary distribution language, an independent trustee, none of it changes the outcome when the settlor and the beneficiary are the same person.

So if Dr. Adebayo transferred his brokerage account into an irrevocable trust naming himself as a lifetime beneficiary, a Florida court would generally treat those assets as still reachable by his creditors, up to whatever the trustee could pay him. The trust would not have accomplished what he read about.

What About a Nevada or South Dakota Trust for a Florida Resident?

This is where things get uncertain, and it is worth being honest about that uncertainty rather than glossing over it. States like Nevada, South Dakota, and Wyoming allow self-settled asset protection trusts by statute. If Dr. Adebayo set one up in Nevada, naming a Nevada trust company as trustee, the trust document itself might say Nevada law governs.

The problem is that Florida applies its own strong public policy against self-settled trusts, and Florida courts have not simply deferred to another state's choice-of-law clause when a Florida resident is trying to shield assets from Florida creditors. A creditor who obtains a Florida judgment against Dr. Adebayo could ask a Florida court to look past the Nevada trust structure.

None of this means an out-of-state DAPT never works for anyone. It means a Florida resident relying on one faces real conflict-of-law risk that a resident of the trust's home state would not face, and that risk should be evaluated with eyes open, not assumed away.

Timing Matters: Fraudulent Transfer Rules Apply Either Way

Whether Dr. Adebayo is thinking about a Florida trust, an out-of-state trust, or simply retitling assets, timing is critical. Florida's fraudulent transfer law lets a creditor unwind a transfer made to avoid a known or reasonably anticipated claim. Moving assets into any protective structure after a lawsuit is filed, or after an incident that is likely to produce a claim, is far more vulnerable to attack than planning done years in advance, with no claim on the horizon.

This is why I tell clients that asset protection planning is not something you do in the weeks after being served with a complaint. It works best as part of ordinary, forward-looking planning done while things are calm.

What Actually Protects a Florida Professional's Assets

Florida does not need a DAPT statute because it already gives residents some of the strongest statutory exemptions in the country. For someone in Dr. Adebayo's position, the real toolkit looks like this:

• Homestead. Florida's constitutional homestead protection, found in Article X, Section 4 of the Florida Constitution, shields a Florida resident's primary home from most creditors, regardless of its value, subject to acreage limits and some important exceptions.
• Tenancy by the entireties. Property owned jointly by married spouses as tenants by the entireties is generally protected from the individual creditors of only one spouse, which can matter a great deal for a married professional.
• Retirement accounts. Florida law exempts most qualified retirement plans and IRAs from creditor claims, making them a natural home for savings a professional wants insulated from practice risk.
• Properly structured LLCs. A Florida LLC, particularly one with more than one member, can offer charging-order protection that limits a creditor's remedies against the entity's assets.
• Adequate insurance. Malpractice coverage and an umbrella policy remain the first line of defense for any Florida professional, and they work regardless of how a trust is structured.
• Trusts for other people. The self-settled rule in section 736.0505 only applies when the settlor can benefit from the trust. A trust Dr. Adebayo creates for his spouse and children, where he is excluded from any beneficial interest, is a third-party trust and generally receives full protection from his creditors.

Irrevocable Does Not Mean Frozen Forever

One more point worth addressing, since it comes up whenever I discuss irrevocable trusts with clients like Dr. Adebayo: irrevocable does not mean the trust can never be touched again. Florida law allows several paths to change an irrevocable trust over time, including a nonjudicial settlement agreement among interested parties, judicial modification through the courts, decanting an old trust into a new one under Florida Statutes section 736.04117, the use of a trust protector with defined powers, and modification with the consent of the settlor and all beneficiaries. None of these tools turn a self-settled trust into a protective one, but they do mean a well-designed third-party trust can adapt as a family's circumstances change.

Sources

• The Florida Senate, Florida Statutes section 736.0505, 2024
• Justia, Florida Statutes section 736.0505 (2016)
• Alper Law LLC, articles on Florida asset protection trusts, April 2026
• Dean Mead Law Firm, Florida Trust Code commentary, April 6, 2022

This article is for general informational purposes only and does not constitute legal advice, nor does reading it create an attorney-client relationship. Florida estate, elder, probate, and real estate law are fact-specific and change over time. Consult a licensed Florida attorney about your individual circumstances. Arthur Simpson, Esq. is licensed to practice law in the State of Florida. Attorney advertising.