Other States Permit Punitive Damages For Fraudulent Transfers

When first faced with the possibility of being sued many people’s first reaction is to transfer their assets to someone else or to a legal entity. A common question is whether such a transfer later found to be a fraudulent conveyance may increase the debtor’s liability for money damages. The answer depends upon where the debtor resides.

Florida courts have held that a creditor’s fraudulent transfer remedies do not include an award of additional damages against the debtor. Florida courts describe a fraudulent transfer action as being against the transferee of the debtor’s property to recover the property or the property’s value, but not as an action to compound damage awards against the debtor. There is a general principal of Florida law that a creditor may not recover twice for the same harm suffered as a result of the debtor’s initial tort or contract breach. Continue reading

Non-Resident Eligibility For Head of Household Garnishment Exemption

A South Carolina attorney called me to discuss a wage garnishment against his client in Florida. The client was a resident of South Carolina who was temporarily living and working in Florida. The attorney wanted to know if he could dissolve the garnishment because his client qualified for Florida’s head of household exemption from wage garnishment. Continue reading

Selection of Joint Tenancy Does Not Overcome Presumption of Entireties Ownership

One of my clients asked me to review his applications and titling of his financial accounts to make sure he properly registered his accounts as tenants by entireties. In Florida, a joint marital account with rights of survivorship is presumed to be held as tenants by entireties unless the debtor has shown his intent to disclaim entireties ownership in favor of another form of joint title. Continue reading

Court Denies Garnishment of Member’s LLC Distributions

A writ of garnishment is a collection tool that gives the judgment creditor the right to collect a debt owed to the debtor. In a Florida appellate case decided earlier this year a judgment creditor convinced a trial court to issue a writ of garnishment against a limited liability company to garnish distributions that the LLC owed to the judgment debtor by virtue of his membership interest. Continue reading

An Advantage of Issuing LLC Ownership Certificates

Florida law does not require a limited liability company to issue physical ownership certificates to its members. Ownership of a Florida LLC may be established, and usually is stated, exclusively in the appropriate section of the LLC’s operating agreement. LLCs differ in this respect from corporations because corporation ownership is established by issuance of stock certificates rather than a shareholder agreement. Even though LLC certificates are not required, I sometimes advise clients to issue share certificates from their LLC. Continue reading

Which States Recognize Tenants by Protection?

One of my married clients this week had recently moved to Florida to seek protection from a large lawsuit. The client owned property jointly with his wife in several states including his previous domicile of Pennsylvania, a vacation home in North Carolina, and newly acquired joint property in Florida. The issue presented is whether these marital assets were all exempt as tenants by entireties assets after the client declares Florida as his primary home. Continue reading

Sole Proprietorship Advantages For One-Owner Businesses and Professions

Most one person professional business- such as attorneys or physicians- operate as a legal entity (P.A. or L.C.) . The professional is an employee who receives from the business a combination of salary and profit distributions. This business arrangement has tax advantages because it can reduce employment taxation, but it may not be best for asset protection when the business and/or the professional owner has a potential legal problem. Continue reading

Collection of Domestic Support From Irrevocable Trust

Asset protection against domestic support judgments is very difficult. As an example, one of my clients has been paying substantial alimony to an ex-wife. His surviving parent, who lives in South Carolina, told him that his S.C. estate planning attorney set up a living trust that would protect the client’s future inheritance from his ex-wife by placing the inherited assets in a discretionary spendthrift trust. The client asked me to confirm the protection under Florida law. Continue reading

Are Social Security Benefits Protected From Securities and Exchange Commission Collection?

A caller said that the Securities and Exchange Commission had a civil judgment against him for his violation of federal securities laws. He wanted to know if the SEC could take his social security income when he retires. He said he had read my prior blog entries that said social security is exempt from garnishment, but that he had read something to the contrary on the internet. Continue reading

Moving Protected Homestead Equity From Another State to A Florida Homestead Property

Selling an exempt homestead in one state in order to move in to a new Florida homestead can be tricky. One must be careful to preserve the  protection of current homestead while it is on the market and also protect a Florida property that is purchased before the old home is sold and the new Florida home is occupied. Continue reading