A Revocable Trust Will Not Protect You From Creditors, and Other Things Florida Families Get Wrong
Most people walk into an estate planning consultation with a firm opinion about trusts, usually formed by a TikTok video or a cowboy-hat-wearing stranger on Instagram. The problem is that revocable and irrevocable trusts solve completely different problems, and confusing the two leads families to expect protection they will never get.
What a Revocable Trust Actually Does
A revocable trust exists for three reasons. First, it lets someone retain full control over assets during their lifetime, without juggling beneficiary designations across multiple accounts. Second, it plans for incapacity. If the person who created the trust becomes disabled, a named successor trustee can step in immediately, with no guardianship court proceeding required. Third, and most commonly requested, it avoids probate.
Probate in Florida is a public, court-supervised process, and it is not cheap. The state sets a reasonable attorney fee at 3% of the estate, and the personal representative is entitled to another 3%. On a $500,000 estate, that is $15,000 to the attorney and another $15,000 to the personal representative, before factoring in delays tied to a judge’s docket.
The Misconception That Costs People the Most
A revocable trust offers zero creditor protection during the grantor’s lifetime. The trust is legally treated as an extension of the person who created it, so any judgment creditor can pursue trust assets exactly as they would pursue that person directly.
There is one nuance that trips up even experienced planners: married couples in Florida can hold accounts as tenants by the entirety, which shields those assets from an individual spouse’s creditors. Moving those same accounts into a joint revocable trust severs that protection, since a judgment against one spouse can then reach the full account.
Where Irrevocable Trusts Come In
An irrevocable trust trades control for protection. Once assets are transferred in, the grantor typically cannot serve as trustee or freely access the funds. In exchange, the trust can shield assets from creditors and lawsuits, provided the grantor is not also the beneficiary. A self-settled irrevocable trust, where the person funding it is also the one benefiting from it, gets no creditor protection under Florida law.
Where irrevocable trusts work well is for third-party beneficiaries. A grandparent can fund a trust for a young grandchild, protecting an inheritance from that grandchild’s future creditors, divorces, or lawsuits. The same structure applies to special needs planning: a third-party special needs trust lets a family member with a disability receive support without jeopardizing government benefits, and unlike a first-party trust, none of the remaining funds have to be repaid to the government after they pass away.
Tax and Medicaid Considerations
Irrevocable trusts also solve estate tax exposure. A life insurance policy owned personally counts toward the taxable estate. Moved into an irrevocable trust, that same policy can pass outside the estate entirely, which matters significantly for high net worth families approaching federal exemption limits.
Medicaid asset protection trusts follow a similar logic. Assets transferred into one are no longer countable for Medicaid eligibility once the five-year lookback period has passed, giving families a way to protect savings while still qualifying for long-term care coverage.
The right structure depends entirely on the family, the assets, and who stands to inherit them. There is no version of this that fits every household the same way.
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