Discretionary trust question

[cplus_man]

What is the name of your state? Florida

I am thinking about establishing an irrevocable trust to gift some assets to my only child. The only child would be named sole beneficiary, and would be also be sole successor trustee. I am interested in protecting the assets from the child's creditors as well.

I've done some pretty hard research on how this type of trust works, and if I understand correctly, trust assets can't be protected from creditors of a beneficiary when the sole trustee is the sole beneficiary, even if the sole trustee is given absolute discretion over distributions. (Please correct me if I'm wrong).

Can the trust agreement give a sole trustee/sole beneficiary (with absolute discretion over distributions) the power to name additional beneficiaries in order to maintain creditor protection and keep the original sole beneficiary's creditors from reaching trust assets?

 

[Mich parent]

I am also considering a discretionary trust. I'm not sure on this but the way I understand it is that with a discretionary trust the beneficiary has no absolute interest, (ascertainable interest) but I was told that creditors can intercept the interest or principal when a trustee makes distributions to the beneficiary, that is where the discretion of the trustee can turn the distributions on or off. if a creditor can intercept distributions how is the trust benefiting the beneficiary. ..I'm not a lawyer, just soneone trying to determine the best way to protect my beneficiaries from divorce and possible future creditors , I have a lot of research to do..good luck to you .... probate court noted that discretionary trusts can

protect assets from creditors when the trust
settlor is a

third party and the beneficiary has no absolute interest in

A discretionary trust provides that a “trustee may pay

to the beneficiary so much of the income or principal as he

in his discretion determines . . . .” Miller v Dep’t of

Mental Health, 432 Mich 426, 429; 442 NW2d 617 (1989).

Normally, a discretionary trust cannot be reached by

creditors because the beneficiary has no ascertainable

interest in the assets. Id., p 431. However, where the

beneficiary is also the settlor of the trust, we agree with

the Court of Appeals in In re Johannes Trust, supra, that

creditors can reach the assets of the trust.