Fla. Stat. § 736.1506 - Commentary to Florida Trust Code
Legal Commentary on Fla. Stat. § 736.1506
Fla. Stat. § 736.1506 explains the rights and limitations of a creditor who might want to access the assets in a community property trust. Unless a community property trust provides otherwise in its terms, a creditor seeking to satisfy a debt owed by one spouse alone will be able to access up to half the assets in the trust. However, a creditor may potentially satisfy the spouses’ joint debts using any part of a community property trust owned by the spouses.
If you assume that a joint trust between spouses could hold property as tenants by the entirety (TBE), then a community property trust would be a significant downgrade from a TBE trust in terms of creditor protection. This is because any asset held as TBE is completely protected from the creditors of one spouse alone. Unfortunately, we do not know whether a TBE trust is allowed under the laws of Florida because the courts have issued contradictory rulings. See In re Givans, 623 B.R. 635 (Bankr. M.D. Fla. Sept. 30, 2020); see also In re Romagnoli, 631 B.R. 807 (Bankr. S.D. Fla. 2021). Therefore, if creditor protection is the primary goal, it may be that all joint trusts should be avoided, including community property trusts.
Text of Fla. Stat. § 736.1506
Satisfaction of obligations.—Except as provided in s. 4, Art. X of the State Constitution:
(1) An obligation solely incurred by one settlor spouse before or during the marriage may be satisfied from that settlor spouse’s one-half share of a community property trust, unless a greater amount is otherwise provided in the community property trust agreement.
(2) An obligation incurred by both spouses during the marriage may be satisfied from a community property trust of the settlor spouses.
History of Fla. Stat. § 736.1506
Fla. Stat. § 736.1506 became law on July 1, 2021 as part of the Community Property Trust Act. It has not been amended or revised since that date.
Fla. Stat. § 736.1506 appears to be heavily influenced by Tenn. Code Ann. § 35-17-106.
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