• Real estate. Florida’s homestead exemption means that you cannot lose your home in a Florida lawsuit in most cases. There is no monetary limit on the exemption, but there is a limit on acreage. If you live within the city limits, homestead laws apply up to one-half acre. If you live in the country, the homestead exemption applies up to 160 acres.Tenants by entireties is another asset protection tool for married Florida property owners. It basically states that the property’s title cannot be severed without the consent of both spouses in most circumstances. In Florida, all personal and real property can be held as tenants by entireties. The ownership must meet the “six unities” to qualify, including unity of possession, unity of interest, unity of time, unity of title, survivorship, and unity of marriage. As long as no creditor issue exists, couples should consider transferring their assets held jointly or individually before marriage as tenants by entireties after marriage.

 

• Life Insurance. The cash value of life insurance policies is completely excluded from any legal project in favor of the creditor in Florida. Whole life and universal life insurance policies provide a cash value over time and are good examples of the types of assets to protect. Term policies, however, do not have a cash value.

 

• Most annuities. Annuities are generally exempt from creditor claims under Florida statutes. There are many types of annuities, but the two main types are private annuities which are created by private contracts and those that are created by contracts with traditional life insurance companies. In Florida, private annuities are not creditor protected, but those offered by traditional life insurance companies are. The cash value of an annuity is also exempt from creditor claims. So what does that mean? Basically, if you own a business and you purchase an annuity with an insurance company and later get sued because of an accident at your business, the annuity will be protected from the becoming part of the settlement.

 

• Retirement Accounts. Under Florida’s ERISA law, a qualified retirement plan such as an IRA, 401(K) or 403(b) are protected from court judgements. Such plans are also protected against bankruptcy. An inherited retirement account that is transferred to a surviving spouse is also protected. Even though Florida signed out of bankruptcy exemptions that guide federal states, you are still allowed to claim state law exemption for retirement accounts in a bankruptcy proceeding. However, distributions or withdrawals from retirement accounts are not protected against creditor claims.

 

• Head of household wages. In Florida, wages of a debtor who is head of household are exempt from creditor collection. The head of household is defined as someone who provides more than 50 percent of the support for someone else and must have a moral obligation to support that person, such as a spouse, parent, or child. This exemption applies to wages deposited in a bank account for up to six months. Where it can be challenged legally is if the head of household earns wages from their own company but can’t demonstrate that they pay actual wages periodically. In this situation, the head of household should have an employment agreement in place and actually pay themselves wages on a consistent basis.

 

• LLC and limited partnerships. Under Florida law, the only remedy for a creditor to collect from a multi-member LLC or limited partnership is through a charging order. This is a court-ordered lien on the distributions from the LLC to the member. Because the charging order is an exclusive remedy, creditors cannot get the underlying assets owned by the company, which protects those assets from execution. Structuring a business’ legal framework at its formation is the key to future protection from creditors’ claims.

 

• Other commonly protected assets. These include health aids, medical savings, accounts, social security, prepaid college plans, disability income, unemployment benefits, and estate planning trusts.

• Divorce. Asset protection usually refers to claims from civil creditors but is ineffective in avoiding family court judgments for alimony or child support. Family law judges in Florida can override state laws that protect retirement accounts, trusts, bank accounts, and real estate. Even offshore assets can be ordered back to the U.S. in judgments.

 

• Taxes. The IRS can place a lien on all a taxpayer’s assets to secure collection of delinquent taxes. That includes the Florida homestead. Some try to move pre-tax assets offshore in hopes to avoid paying taxes, but not only is that not a good tool for asset protection, moving assets offshore to avoid reporting that income is tax evasion—a criminal offense.

 

• Federal Agencies. Super creditors can always override Florida statutory exemptions. These include the IRS, Department of Justice, FDIC, Federal Trade Commission, and the Securities and Exchange Commission. These agencies can seize half of personal property that might be “protected” as tenants by entireties. They can also garnish wages, even of a head of household. They also have the power to seize assets before a judgment is even entered against the debtor.

The best tool for protecting your assets is common-sense planning and the guidance of an experienced attorney like Edward Reyes. For example, liability insurance is often the first line of defense against negligence. You can also reduce your legal risks in both business and personal dealings through proper contract review, preparation, and other business agreements.

Just as some don’t see a doctor until they are experiencing symptoms, some don’t consider asset protection until they feel vulnerable to a lawsuit. Even after a claim arises or a lawsuit is filed, you can still seek legal asset protection. At this point, asset protection planning is much more difficult but not impossible. Even asset protections implemented later on can put you in a better negotiating position.

We have the experience to protect your interests and your assets, no matter how large your portfolio or intertwined your investments. Contact us for a free initial consultation to discuss obtaining the asset protection you deserve at 813-421-3411.