what assets are protected in a lawsuit in florida?

Whereas an annuity provides a benefit during the policyholder’s lifetime, life insurance is purchased primarily for the death benefit to be available for the policy holder’s beneficiaries. The other thing to know is that a spouse who signs a nuptial agreement may be waiving substantial financial rights such as ½ the marital home if owned prior to marriage or rights to investment accounts, alimony, etc. Many states also consider whether the policy is matured and for the benefit of only the policy holder or primarily for the beneficiaries, thus warranting greater protection. The key assets that are protected from creditors in Florida include: In most cases, you cannot lose your house in a lawsuit in Florida. The “somewhat obvious” reason why an asset protection plan is needed is simply that we live in a society with a legal environment that tends to favor creditors. Enter your name and email to get FREE access! Review of assets and income to determine what is currently protected or not protected. Do You Have to Live in Florida to Claim Head of Household Wage Garnishment Exemption? Some state laws extend this to traditional IRAs as well. However, in Florida, the state legislature has undertaken efforts to update corporate laws in order to provide more asset protection for corporations akin to the charging order protection discussed above for LLCs. This concept means that the assets that are owned by the LLC would also be protected from creditors. Whereas the rules concerning homestead protection and qualified accounts are somewhat “cut and dry” it gets a bit more interesting in the following sections because contractual language may be used to “enhance” your asset protection. I forwarded your information to our Legal Director Gene Ross to reach out to you to schedule. It is one of the strongest asset protection tools available. Ideally, any marital agreement should be implemented at the inception of a marriage or shortly thereafter as opposed to years later. Florida Asset Protection Summary Homestead Exemption. If you’re into legal analysis, this FL Bar Journal article offers a fair overview of this legal debate in Florida: https://www.floridabar.org/the-florida-bar-journal/creditors-rights-under-private-annuities-and-grantor-retained-annuity-trusts-in-florida/. Asset protection is about protecting the “stuff” that you have worked so hard to accumulate. For example, Florida exempts 100 percent of the cash value of annuities without exemption. The Florida limited partnership (LP) has historically been well known in real estate investor circles because it allows one person to control the partnership (the general partner) and other partners to contribute funds and participate in profits (the limited partners). We also gave tips on protecting your assets from judgments or lawsuits with 1), proper insurance, and 2), business entities. There are many other elder law asset protection strategies that may be considered on a case by case basis if Medicaid qualification is needed. McDonald’s Restaurants found this out years ago with the infamous “hot coffee lawsuit,” Liebeck v. McDonald’s Restaurants, in which an elderly customer won a large judgment by jury (2.8 million) after asserting that the coffee she spilled on herself was unreasonably hot. Asset protection planning is the process of developing a customized plan with an attorney to protect your assets from lawsuits and collection from civil judgment creditors. The level of protection offered for the family home, or homestead in Florida, is among the best in the country, possibly second only to Texas. Some states only protect qualified accounts that are not for the benefit of the debtor, whereas other states do not impose this condition. If you have additional questions, I recommend you connect with our legal director Gene Ross at admin@gibbslawfl.com to schedule a confidential individual discussion. You will want to consult with a licensed financial … Enter your email address below get access to this free eBook. It is your task to determine what constitutes an asset and thus what warrants asset protection for you. Unless your creditor works for the U.S. government, however, it must have court approval in the form of a civil judgment before laying claim to your assets. And under Ohio law, a non-resident can’t be a receiver over an Ohio corporation. These accounts are generally protected because the IRS is interested in preserving these accounts for future taxation and the protection often applies in both the bankruptcy court (federal) as well as the state’s courts. I believe you’ve already answered my question in the above article but would like to confirm. What about a manufactured home? My only asset is a 2017 Fifth Wheel Trailer that is paid off and a 2012 F350 which the bank owns. A structured official loan which i make payments to him back at a very low interest rate. The most important exemption from creditors in Florida is the Florida homestead exemption. So, as a strategic asset protection plan, options 1 – 7 from the strategies above move from the most common options for average folks at number 1 to the most expensive and least common approach at number 7. SIGN UP and get started today. The information appearing on this website is intended to be used for educational purposes only and may not be used as legal advice. For some, asset protection is as simple as keeping funds in the bank and using a safe deposit box. The beneficiary of a land trust may be an individual or an entity such as an LLC. Here is another attorneys who seems to think they are protected: https://www.alperlaw.com/florida-asset-protection/florida-annuities/ Thank you. Upon my death, is my Florida Homestead, inherited by my heirs, protected from creditors? Thank you William, yours is a rather involved question and I’m honestly not sure what you could potentially argue in terms of protection when you’re classifying the funds that way. Comparing the state of Texas, it offers even greater protection of 10 urban acres and 200 rural acres, and this protection is strictly enforced by the state courts. Protecting assets belonging to a business requires a different set of asset protection tools than protecting individual assets. Medicaid trusts in Florida or income only trusts are utilized for elder law asset protection, which often focuses on keeping family assets outside of the reach of Florida Medicaid and these are subject to the 5 year look-back period for Florida Medicaid transfers. The reasoning for heightened asset protection of qualified accounts is that they generally are for retirement purposes. Florida law is considered to be debtor-friendly because of the numerous assets exempt from lawsuits and civil judgments under Florida law. The bankruptcy chapter you choose to file will determine what will happen to any nonexempt property. Others visualize offshore trust accounts and hiding assets in obscure foreign corporations. A limited liability company (LLC) in Florida is perhaps the most flexible and accessible way to provide asset protection for “non-qualified” assets or assets not covered by one of the above strategies. Hello Lynne and thanks for your question. An asset protection trust is irrevocable, meaning that any transfer of assets into the trust is permanent.In other words, the trust would own the assets in question and they would be managed by the trustee. Florida asset protection is a legal process where a debtor structures his or her assets—such as property, cash, businesses, and investments in such a way that makes it much more difficult for a current or future creditor to collect on those assets. Next post: Florida Medicaid Asset Test [Managing the 5 Year Lookback], Previous post: Trust Amendment [for Changing Estate Plans] in Florida, Download The Estate Planner's Tactical Guide for FREE. It is almost never too late for asset protection. Although the judge in that case ultimately reduced the verdict and the case was settled, the “hot coffee” fact pattern was repeated recently when a police offer filed a similar lawsuit against Starbucks Corporation. The idea behind a land trust is that the creditor may, once again, not reach an asset because it is in the hands of the trustee and the beneficiary has no immediate interest to record a lien upon or otherwise attach. Florida’s asset protection laws apply to permanent residents of Florida and people in other states who own property in Florida. I would like to talk to an atty or Mr Gibbs relating to asset protection. For a business owner, a creditor may be anyone who enters your place of business. A trust is a legal entity that holds assets for the benefit of … Retirement accounts, on the other hand, are completely protected exempt assets that cannot be reached by creditors. I always attempt to take the conservative approach when offering assurances to the public and my original findings were supported by the asset protection society as per this chart: http://www.assetprotectionsociety.org/pdf_files/APS.50.State.Summary.pdf. If you’d like to explore options for those, you can set up a 15 minute appointment on the website at no cost. Florida asset protection is a legal process where a debtor structures his or her assets—such as property, cash, businesses, and investments in such a way that makes it much more difficult for a current or future creditor to collect on those assets. You might think you’re just parodying a well-known song, or you could think it’s no big deal to paint Disney characters on the wall at the daycare center you own and operate. Texas has a similar statute that is just as strong as Florida’s. Hi Tony, thanks for inquiring. Asset protection strategies, like insurance, are best used before a problem arises. The latter, IRS, is somewhat self-explanatory because, as a federal entity, the ability of the IRS to pursue assets is somewhat unlimited when compared to your “non-super” creditors, including the ability to place liens upon homestead property. Asset protection planning usually does not shield tax debtors from U.S. income tax liability. A “slip and fall” can easily result in a prolonged, expensive lawsuit and the real problem is that plaintiffs’ lawyers are on the hunt for clients, and they often do not charge any upfront fees to take a case. By taking the right steps today, you will protect your family’s financial health tomorrow. It turns out you are far more … Reorganization of asset titles and asset transfers done before creditor problems arise are effective if liability does eventually arise. A few dollars spent on attorney fees prior to signing the agreement can save substantial attorney fees in the future. Beyond that I would say is wishful thinking. I’ll then offer an overview of various asset protection strategies used in Florida. Thank you for a great article and thanks for considering my question. Judgments can also lead to wage garnishments and other unpleasant circumstances. As I’ve mentioned a number of the strengths of Florida asset protection, the laws and potential asset protection benefit vary from state to state. This means you won't have to start over saving money for your retirement. The extent of that protection, however, varies. EXCELLENT article. Traditionally, this structure has also placed all of the liability of the general partner for decisions made and actions taken on behalf of the partnership. There are two creditors that warrant a special category that I define as “super-creditors.”  The super-creditors earn this definition because they pack an extra punch due to their unique position to get your assets under the current laws. If “Yes” would the principal of the IRA be protected until the funds were distributed out of the IRA due to RMD rules? Asset protection strategy in the context of threatened litigation, or even after a lawsuit is filed, is difficult but not impossible. Therefore, Plaintiff's total damages may have to exceed $20,000 before your assets would be exposed] The exemptions that you are entitled to claim to protect your assets are listed in the Florida Constitution (homestead & $1,000 of "personal property"), Florida Statutes Chapter 222 (e.g. Too often, decisions by judges or juries are based more on emotion than on facts or the law and the result is a catastrophic damage award that wipes out a lifetime of hard work and investment. Can discuss specific situation in consultation. Your email address will not be published. If the home is in the county, then the exemption applies up to 160 acres of contiguous property. It’s important to plan for your retirement, and creating an Individual Retirement Account (IRA) can be one of the best ways to do so. Asset Protection . Promissory notes and mortgages are usually drafted heavily in favor of the lender creditor, and any kind of legal dispute will be extremely expensive. Wherever you are in this important process, I encourage you to seek professional legal counsel for this endeavor due to the complexity and importance of this area. Grantor retained interest trusts (GRATs and GRUTS). thank you for great information. Full disclosure of all assets by both spouses and a full financial statement attached to the agreement. An important distinction is if something is not appreciating in value or creating income then perhaps it should not be considered an asset. According to Florida law, this land trust contract creates an “executory contract” in favor of the land trust beneficiary that serves as a protective barrier against predatory creditors. Limited partnerships and limited liability companies are used for asset protection of businesses or investment assets. (Serving Fort Myers, North Fort Myers, Cape Coral, Bonita Springs, Naples, Orlando, Tampa, Sarasota, West Palm Beach, and Fort Lauderdale). If I have IRA RMD that is FAR in excess of what is needed to support my family, are those excess distributed funds subject to claims of a creditor (eg a judgement in an auto lawsuit)? Actually, a creditor may even place a lien on a homestead in my experience but cannot force a sale of the home. By removing those assets from your ownership, you can protect them against creditor lawsuits. Whether the trust is in one or both married persons names depends upon how the trust is written. Your home is protected from creditors in Florida subject to acreage limitations. Don’t get me wrong, an annuity can be a solid financial choice under proper circumstances. Call (407) 444-0404.Schedule a consultation online.Or submit the form below. A corporation in Florida is filed similarly to an LLC in that articles of incorporation are filed with the secretary of state in the state of incorporation. Trademark Infringement Lawsuits. Transfers done in the face of a legal threat may withstand fraudulent conveyance attack when properly planning minimizes badges of fraud. Don’t Hop the Train Just Yet! Yes, SEP-IRAs are protected from civil judgments in Florida by statute 221.21. Next, the Florida legislature has enacted many statutes which protect various types of assets from creditors of Florida residents. Other than the acreage limitation, there is no monetary cap on the homestead exemption in Florida. Your asset protection strategy will depend somewhat upon the nature and value of your stuff as well as your priorities and goals. The current trend in Florida is to use LLCs instead of limited partnerships because a controlling partner doesn’t need to assume unlimited liability and all of the other purposes of a limited partnership may be accomplished by allocating different “classes” of membership interest in the LLC. We serve clients throughout Florida with phone, Zoom, and office appointments. 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