Irrevocable Living Trust in Florida

Last reviewed: June 12, 2026 · Reviewed by Alexis Bucelo Diaz, Esq.

An irrevocable trust in Florida is a legal arrangement in which a grantor permanently transfers ownership of assets to a trust, generally giving up the right to change or revoke it after signing. Because the assets no longer belong to the grantor, they may be excluded from the taxable estate, protected from certain creditors, and distributed to beneficiaries without going through Florida probate administration. This page explains how these trusts work, what types exist, and when one fits your estate plan. For the full picture of how our Florida trust attorneys design and fund every trust type, start there.

What Is an Irrevocable Trust in Florida?

An irrevocable trust is a legal arrangement in which a settlor (the person creating the trust) permanently transfers ownership of assets to the trust. Under the Florida Trust Code, FL Stat. Chapter 736, the settlor generally cannot change, amend, or revoke the trust after it is created without the consent of all beneficiaries or a court order. The assets are no longer the settlor’s property, which is the foundation of every benefit the trust may provide.

How a Florida Irrevocable Trust Works

Assets Leave the Grantor’s Estate

The federal tax code contains two provisions that determine whether trust assets are pulled back into a grantor’s taxable estate. Under IRC §2036, assets transferred with a retained life estate or retained right to income remain in the gross estate. Under IRC §2038, assets over which the grantor retains a power to revoke, alter, or amend are also includible. A properly structured irrevocable trust removes both of those retained interests, so the transferred assets generally pass outside the federal gross estate. The structure must be drafted correctly from the start. Retaining even a minor control over the trust can defeat the estate tax purpose entirely.

The Role of the Trustee

An independent trustee manages the trust assets, makes distributions according to the trust document, and owes fiduciary duties to the beneficiaries. Under FL Stat. §736.0402, the same person cannot serve as the sole trustee and sole beneficiary. For most irrevocable trust structures, an independent corporate trustee or a trusted family member who is not a beneficiary fills this role. The choice of trustee affects both the trust’s creditor-protection integrity and its day-to-day administration.

Common Types of Irrevocable Trusts in Florida

No single irrevocable trust structure serves every family. The five types below address distinct planning goals. Each requires careful drafting and coordination with your CPA, financial advisor, and estate planning attorney. All of them require using the current federal estate tax exemption strategically.

Irrevocable Life Insurance Trust (ILIT)

An ILIT holds a life insurance policy outside the insured’s taxable estate. When the insured dies, the death benefit is paid to the trust rather than to the estate, so it is not included in the federal gross estate under IRC §2042. ILITs are commonly used by families whose primary liquidity asset is a large life insurance policy. The trust must be established and the policy transferred (or applied for by the trust) at least three years before death to avoid the three-year rule of IRC §2035.

Spousal Lifetime Access Trust (SLAT)

A SLAT allows one spouse to transfer assets irrevocably to a trust for the benefit of the other spouse and, typically, their children. The gifting spouse removes the assets from their taxable estate while the beneficiary spouse retains access to distributions during their lifetime. SLATs are commonly used to leverage the federal gift and estate tax exemption for married couples. They must be drafted carefully to avoid the reciprocal trust doctrine, which can pull assets back into the taxable estate if two spouses each create mirror-image SLATs for each other. A joint trust for married couples may serve different goals and is worth comparing before selecting either structure.

Grantor Retained Annuity Trust (GRAT)

In a GRAT, the grantor transfers assets to the trust and retains the right to receive a fixed annuity payment for a specified term. At the end of the term, any appreciation above the IRS-assumed growth rate (the §7520 rate) passes to the remainder beneficiaries free of gift tax. GRATs work best when the transferred assets are expected to appreciate significantly and the grantor survives the trust term. If the grantor dies during the term, a portion of the assets may return to the estate.

Charitable Remainder Trust (CRT)

A CRT pays an annuity or unitrust amount to one or more non-charitable beneficiaries (often the grantor) for a period of time, with the remainder passing to a designated charity at the end of the term. The grantor receives a partial charitable deduction in the year of the contribution. CRTs are frequently used to convert highly appreciated, low-basis assets into a diversified income stream without an immediate capital gains event. The trade-off: the charitable remainder leaves less for family heirs.

Medicaid Asset Protection Trust (MAPT)

A MAPT is an irrevocable trust designed to hold assets outside the Medicaid applicant’s countable resources, potentially supporting eligibility for Florida Medicaid long-term care benefits. Florida Medicaid applies a five-year look-back period: transfers to a MAPT made within five years of applying for benefits may trigger a penalty period. This means timing is critical. Families who come to our office after a parent has already been placed in a facility often have limited options. Planning five or more years before anticipated need preserves the most flexibility.

Florida Irrevocable Trust Requirements

Under FL Stat. §736.0402, a valid Florida trust requires all of the following:

• The settlor must have legal capacity at the time of creation.
• The settlor must indicate an intent to create the trust.
• The trust must have a definite beneficiary (or qualify as a charitable, animal care, or noncharitable purpose trust).
• The trustee must have duties to perform.
• The same person cannot serve as the sole trustee and the sole beneficiary.

The trust document must also be in writing and signed by the settlor. Many irrevocable trusts include a spendthrift clause, which limits a beneficiary’s ability to assign their interest and restricts certain creditors of the beneficiary from reaching trust assets. Spendthrift provisions are governed by FL Stat. §736.0505. While a spendthrift clause protects a beneficiary’s interest from the beneficiary’s own creditors, it does not shield trust assets from every category of claim. Exceptions include certain government claimants and child support obligations.

Irrevocable Trust and Asset Protection in Florida

Because assets transferred to a properly structured irrevocable trust are no longer owned by the grantor, they may be protected from the grantor’s creditors in many circumstances. The protection is not automatic or absolute, and several conditions affect how effectively it works in practice.

Florida’s fraudulent transfer statutes apply to transfers made with the intent to hinder, delay, or defraud creditors. Funding an irrevocable trust after a creditor’s claim has arisen, or shortly before one is anticipated, may expose the transfer to challenge. Courts look at the timing of the transfer, the grantor’s financial condition at the time, and whether adequate consideration was received.

Under FL Stat. §736.0505, a settlor who is also a beneficiary of an irrevocable trust generally does not receive the same creditor protection that a third-party beneficiary receives. Creditors of the settlor-beneficiary may reach the maximum amount that could be distributed to or for that settlor’s benefit. This is a meaningful limitation for self-settled trusts. Separately, under FL Stat. §736.0814, a trustee’s discretionary power to make distributions does not, by itself, give a beneficiary’s creditors the right to compel a distribution.

For Medicaid planning specifically, the five-year look-back period means that a MAPT must be funded well in advance of need. An attorney should review the full asset picture, the applicant’s health, and any existing creditor exposure before recommending an irrevocable trust for asset protection purposes.

The Step-Up in Basis Issue: What Irrevocable Trust Owners Need to Know

One of the most consequential trade-offs of using an irrevocable trust involves the federal income tax basis of trust assets. Under IRC §1014, assets included in a decedent’s gross estate at death generally receive a stepped-up basis equal to fair market value on the date of death. Heirs who later sell those assets pay capital gains tax only on appreciation occurring after the decedent’s death.

Assets in an irrevocable grantor trust that are not included in the grantor’s gross estate at death do not receive this step-up. IRS Rev. Rul. 2023-2 (Internal Revenue Bulletin 2023-16, April 17, 2023) confirms that such assets are “not acquired or passed from a decedent” within the meaning of IRC §1014(b) and therefore carry over the grantor’s original cost basis. For families holding significantly appreciated assets, this can produce a substantial income tax cost for beneficiaries who eventually sell.

The grantor trust rules under IRC §§671-679 determine whether the grantor continues to be treated as the owner for income tax purposes even after assets are transferred. A trust can be a grantor trust for income tax purposes yet still be outside the grantor’s estate for estate tax purposes. This combination is often intentional in estate planning, but it is precisely the scenario that produces the step-up problem.

Weighing the estate tax savings against the capital gains cost is one of the first conversations in any irrevocable trust engagement. For a full analysis of how the step-up in basis rule applies to different trust structures, see our guide to the step-up in basis at death.

Can You Change an Irrevocable Trust in Florida?

“Irrevocable” does not mean impossible to change. Florida law provides three distinct paths for modifying or terminating an irrevocable trust, each with specific requirements.

• Consent modification. Under FL Stat. §736.0412, after the settlor’s death, the trustee and all qualified beneficiaries may unanimously agree to modify or terminate the trust regardless of any spendthrift or anti-modification provisions in the document. This is often the most straightforward path when all parties are in agreement.
• Judicial modification. Under FL Stat. §736.04113, a court may modify an irrevocable trust when the purposes of the trust have been fulfilled, have become impossible or impracticable, or when compliance with the trust’s terms would defeat a material purpose of the trust due to unanticipated circumstances. The petitioner must demonstrate that the modification serves the trust’s overall intent.
• Decanting. Under FL Stat. §736.04117, an authorized trustee with discretionary distribution authority may “decant” the trust by distributing trust principal to a second trust with different terms, rather than distributing directly to beneficiaries. Decanting can update outdated administrative provisions, add or remove a power of appointment, or restructure trustee succession without court involvement. The second trust’s beneficiaries must be drawn from the beneficiaries of the original trust.

Florida law also provides ways to dissolve an irrevocable trust entirely. A court may terminate a trust under F.S. §736.04113 when its purposes have been fulfilled or have become impossible to achieve. After the settlor’s death, the trustee and all qualified beneficiaries can agree to modify a trust without court involvement under F.S. §736.0412. And when a trust’s value falls below $50,000, F.S. §736.0414 allows termination if the cost of administration no longer justifies keeping it open.

None of these paths is guaranteed to succeed, and not every irrevocable trust qualifies. An attorney should review the specific trust document and the proposed changes before any modification is attempted.

Irrevocable Trust vs. Revocable Trust: Which Is Right for You?

The right trust structure depends on your goals. A revocable living trust in Florida allows the grantor to maintain full control, amend the trust at any time, and serve as their own trustee. Because the grantor retains control, assets in a revocable trust are included in the taxable estate and are not protected from the grantor’s creditors. The primary benefit of a revocable trust is probate avoidance combined with flexibility during the grantor’s lifetime. For families whose main asset is the Florida home itself, an enhanced life estate deed, known as a lady bird deed, can accomplish probate avoidance for that single property without the cost of a full trust.

An irrevocable trust trades that flexibility for potential estate tax reduction, creditor protection, and Medicaid planning benefits. The table below captures the core trade-off:

When an Irrevocable Trust Is Not the Right Tool

An irrevocable trust is not the right choice for every estate plan. It tends to be a poor fit in three common situations:

• You need ongoing access to the assets. If the funds you are considering transferring represent a material portion of your liquid net worth, and you may need access to them in retirement or for unexpected expenses, an irrevocable trust removes that access. Some structures (like a SLAT) allow indirect access through a spouse, but that access ends if the marriage ends.
• Your estate is well below the federal exemption threshold. If your estate is unlikely to exceed the applicable federal estate tax exemption, the estate tax benefit of an irrevocable trust may not justify the cost and loss of control. Review the current exemption on our Florida estate tax and inheritance tax page, which we update as federal law changes.
• You are too close to needing Medicaid. A MAPT must be funded at least five years before applying for Medicaid long-term care benefits. Families who consult our office after a parent has already entered a memory care facility often find that the look-back period has passed, or that remaining assets are below the threshold where a MAPT produces meaningful protection. The earlier the conversation, the more options are available.

How Much Does an Irrevocable Trust Cost in Florida?

Estate planning engagements at Bucelo Diaz Law generally range from $950 to $5,000 and up, and irrevocable trusts sit toward the upper portion of that range because of the tax analysis and funding work involved. Three factors drive where a particular trust lands: the type of trust (an ILIT or Medicaid asset protection trust involves more design work than a straightforward gifting trust), the assets being transferred (retitling real estate or business interests takes more time than moving financial accounts), and how much coordination your broader plan requires so that wills, trusts, and beneficiary designations work together.

That investment should be weighed against what it avoids. Probate on even a modest Florida estate routinely costs more than the trust that would have prevented it; our county-by-county guide to Florida probate costs shows the comparison in detail. We quote a flat fee at your free consultation before any work begins, so there are no surprises.

Working With a Florida Irrevocable Trust Attorney

Irrevocable trust planning requires a complete review of your asset picture, tax situation, family goals, and health considerations before any structure is recommended. There is no one-size-fits-all solution, and an irrevocable trust that is ideal for one family may create unnecessary complexity or cost for another.

Alexis Bucelo Diaz focuses her practice on estate planning and trust law, including irrevocable trust structures for Florida families. She holds a Master of Laws (LL.M.) in Estate Planning from the University of Miami School of Law, which provides specific depth in the tax and fiduciary issues that these trusts involve. That LL.M. credential, combined with more than 15 years of Florida estate planning practice, means the conversations she has with clients go beyond the basics.

One of the most common conversations involves clients who have heard from a financial advisor or CPA that “irrevocable trusts are good for taxes” without learning about the step-up in basis cost under Rev. Rul. 2023-2. Another common situation involves families who call about Medicaid planning after a parent’s health has already declined significantly. These are real planning windows, and they close faster than most families expect.

Bucelo Diaz Law serves clients from offices in Weston, Ocala, and Naples and handles irrevocable trust matters statewide. Consultations are available in English and Spanish.

About the Author

Alexis Bucelo Diaz, Esq., LL.M. is the founding attorney of Bucelo Diaz Law, PLLC. She holds a Master of Laws (LL.M.) in Estate Planning from the University of Miami School of Law and has more than 15 years of focused experience in Florida estate and trust law. Florida Bar #86918. Selected to Super Lawyers Rising Stars in 2025.