Asset Protection · Exit Planning
The five-year runway: Florida exit planning before the offer lands
There is a conversation that happens in this office more often than any other. A business owner sits down with a signed letter of intent, slides it across the table, and asks what can be done to reduce the tax hit.
The honest answer is: less than you would like.
Bill Baynard, CEO of Novare Capital Management, makes the same point in Kiplinger. The owner who starts planning five years out and the owner who starts five months out are separated by eight figures. He is describing federal estate tax, and he is right.
In Florida there is a second reason the runway matters, and it is the one that actually gets people hurt.
What the runway buys you, part one: a frozen number
The mechanism behind almost every serious exit-planning structure is a valuation freeze.
You move an interest in your company into an irrevocable trust. The interest is valued on the day it goes in. Everything the company does after that — every new location, every acquired customer list, every point of margin, happens inside the trust, outside your taxable estate.
Baynard offers an illustration, and it is worth reading as his hypothetical rather than as a promise. An owner moves half a company valued at $15 million into a trust. The company later sells for $60 million. The trust's half is now worth $30 million, and it sits outside the estate.
The number that mattered was set five years before anyone drafted a purchase agreement.
This is why a signed letter of intent is such a hard stop. Once a buyer has put a price on paper, the valuation conversation is over. You cannot freeze a number a third party has already established.
What the runway buys you, part two: a clock that runs out
Here is the part most exit-planning content skips, and it is the part a Florida asset protection attorney thinks about first.
A transfer that moves value out of your estate also moves value away from anyone who might later have a claim against you. Florida has a statute for that. Chapter 726 is the Florida Uniform Fraudulent Transfer Act, and it has not been renamed — several states adopted the Uniform Voidable Transactions Act and now say "voidable transaction," but Florida did not. Here it is still a fraudulent transfer.
Under Fla. Stat. § 726.105(1)(a), a transfer is voidable if it was made with actual intent to hinder, delay, or defraud a creditor. Because nobody writes that intent down, the statute gives courts eleven badges to weigh. Among them: whether the transfer went to an insider, whether it was concealed, whether the debtor retained possession or control, and whether the transfer happened after the debtor had been sued or threatened with suit.
Then there is the limitations period. Fla. Stat. § 726.110 gives a creditor four years after the transfer to attack it, or one year after the transfer was or could reasonably have been discovered.
Read those two sections together and the strategy becomes obvious. A transfer made while your horizon is genuinely clear ages out of reach. The badges point the right way, the four years run, and the structure becomes something nobody can unwind.
A transfer made two weeks after a demand letter arrives does not age out. It becomes an exhibit.
Both clocks expire on the same day. The day someone makes an offer, or the day someone files a complaint. Whichever comes first.
Which trust actually works in Florida
Owners are frequently told to "set up an irrevocable trust" without being told which kind, and in Florida that distinction decides whether the structure does anything at all.
Florida has no domestic asset protection trust statute. Several states do. Florida does not, and Fla. Stat. § 736.0505 explains why it matters:
- § 736.0505(1)(a): the property of a revocable trust is subject to the claims of the settlor's creditors during the settlor's lifetime, to the extent it would not have been exempt if owned outright. Your revocable living trust is a probate-avoidance and continuity instrument. It is not a shield.
- § 736.0505(1)(b): for an irrevocable trust, a creditor or assignee of the settlor may reach the maximum amount the trustee could distribute to or for the settlor's benefit.
That second one is the whole ballgame. If the trustee can hand money back to you, a creditor can reach it. A trust you still benefit from protects nothing from your own creditors in this state.
Which explains the two structures that come up most often:
The spousal lifetime access trust (SLAT). An irrevocable trust naming your spouse as lifetime beneficiary, remainder to children and grandchildren. You are not a beneficiary, so § 736.0505(1)(b) has nothing to grab. Your household still has indirect access through your spouse. The tradeoff is real and should be said out loud: divorce or your spouse's death ends that access.
The intentionally defective grantor trust (IDGT). Assets sit outside your taxable estate while the income remains taxable to you. Paying that tax is itself a further transfer of value to your beneficiaries that is not treated as a gift. And § 736.0505(1)(c) confirms the trust is not exposed to your creditors solely because the trustee holds a discretionary power to reimburse you for that tax. Florida wrote the carve-out that makes the structure clean here.
The entity underneath matters as much as the trust
A trust sitting on top of the wrong entity inherits the entity's weakness.
Under Fla. Stat. § 605.0503, a judgment creditor of an LLC member gets a charging order. That is a lien on the member's transferable interest, entitling the creditor to distributions that would otherwise go to the member. For a multi-member company, that is the creditor's remedy, and it is a weak one. The creditor waits for distributions the manager may never declare.
For a company with a single member, the statute carves out an exception. Where the creditor shows that distributions will not satisfy the judgment within a reasonable time, a court may order the interest sold at a foreclosure sale.
So Florida LLC and asset protection analysis starts with a question most owners cannot answer immediately: how many members does the operating company actually have today? Not what the operating agreement said at formation. Who holds membership interests right now.
And under Fla. Stat. § 605.0502, a transferable interest conveys the right to distributions and nothing else: no vote, no management participation, no right to inspect the books. Which is exactly why business succession planning Florida work needs a real operating agreement with transfer restrictions and a funded buy-sell behind it.
A Florida example
Consider a hypothetical Orlando commercial HVAC company. The owner is 58, the business runs about $9 million in revenue, and she thinks she wants out somewhere around 2031. The interest sits in a single-member Florida LLC. There is an operating agreement from 2014 in a drawer. No buy-sell. No valuation since a bank asked for one in 2019.
Five years of runway is a good position. The work, in order:
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Confirm nothing is pending. No claim, no audit, no dispute on the horizon. This is what makes everything below defensible.
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Fix the entity. Bring in a second member, or restructure so the charging-order protection in § 605.0503 is not sitting on the single-member carve-out. Update the operating agreement and fund the buy-sell.
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Get an independent valuation. You cannot freeze a number you have not measured, and the appraisal becomes the contemporaneous record of what the interest was worth on the day it moved.
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Choose the trust with counsel. SLAT or IDGT, drafted so § 736.0505(1)(b) has nothing to reach.
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Execute, then respect the structure. Keep the trustee's discretion real. A settlor who keeps overriding the trustee invites the argument that the trust was always a container with his name on it.
If she instead waits until a buyer calls in 2031, steps 1 through 4 are mostly unavailable and step 5 is all that is left.
Frequently asked questions
Is it too late if I already have a signed letter of intent?
Not entirely, but the largest strategies are gone. The valuation is established and the transfer sits inside the window a creditor or the IRS will scrutinize. There is still post-closing work worth doing. It is a fraction of what was available a year earlier.
Does a revocable living trust protect my business from creditors?
No. Under Fla. Stat. § 736.0505(1)(a) the property of a revocable trust is reachable by your creditors during your lifetime. It is an excellent continuity and probate-avoidance tool and a poor shield.
Can I be a beneficiary of my own asset protection trust in Florida?
Not effectively. Florida has no domestic asset protection trust statute, and § 736.0505(1)(b) lets a creditor reach whatever the trustee could distribute for your benefit. That is why the SLAT names a spouse instead.
How far out is far enough?
Three to five years is the working answer for the strategies with real effect. The limitations period in § 726.110 runs four years from the transfer, and valuation multiples expand as revenue grows, so earlier transfers freeze lower numbers. Sooner is better in both directions.
What to do next
If you own a Florida business you expect to sell, recapitalize, or hand off someday, the useful question is not whether you have a plan. It is how much runway the plan still has.
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Schedule a Discovery CallThis article is for educational purposes only and is not legal or tax advice. Joseph E. Seagle is licensed in Florida only, and every statute referenced here is Florida law. Other states run their own trust and creditor statutes, and several have domestic asset protection trust legislation that Florida does not. Federal and state estate tax rates, exemption amounts, valuation discounts, and income tax basis belong with your CPA and are outside this article. Reading this does not create an attorney-client relationship.
Sources: Kiplinger, Bill Baynard, June 15, 2026. Florida authority: Fla. Stat. § 736.0505, § 726.105, § 726.110, § 605.0502, § 605.0503.
