Florida Asset Protection : Asset Protection Law & Planning in Florida - Florida Homestead Exemption

Offshore trust planning is a highly-publicized method of asset protection. Offshore planning involves establishing legal entities in favorable foreign jurisdictions under the control of trustees who are neither United States citizens nor persons having a business presence in the United States. The purpose of offshore planning is to remove legal battles with creditors to jurisdictions beyond the reach of the United States courts. Offshore planning works, foremost, when an offshore jurisdiction does not recognize judgments rendered by U.S. courts. In order for judgment creditors to reach assets located in such jurisdictions, a creditor must start over and reinstitute the lawsuit against the same defendant in the foreign court system.

The second advantage of offshore planning is that favorable offshore jurisdictions have relatively short statutes of limitation on fraudulent transfers. Domestic asset protection is often vulnerable to a creditor's allegations that the debtor has transferred assets, or has recently converted a nonexempt asset to an exempt asset, in an effort to defraud or delay creditors' collection. Most states have four-year statutes of limitations, which means that a creditor's attorney can attack any asset transfers up to four years after the transfers took place. Favored offshore jurisdictions have two-year statutes of limitation on fraudulent transfers. The shorter statute of limitations makes it easier for debtors to defend creditor challenges of their asset protection planning.

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Florida limited liability companies (LLC) are a popular tool in business planning. Many lawyers use the LLC as an alternative to the Subchapter S corporation as the preferred legal entity for new businesses. Asset protection attorneys also use the LLC as a legal tool for domestic asset protection planning. Membership interests in a limited liability company are not exempt from execution or attachment by judgment creditors, but Florida law gives creditors limited remedies against a debtor's LLC interest. A judgment creditor cannot attach an LLC member's interest. A judgment creditor cannot seize assets owned by the LLC to satisfy a judgment against any one of the LLC's owners. In a properly drafted LLC agreement, the creditor has no rights to inspect the books and records of the LLC.

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Asset protection is a process of insulating your estate assets against attack by creditors and plaintiff's attorneys. In the United States there are more than one million lawyers, each with a license to file lawsuits against deep-pocket defendants by paying court filing fees of $150 or less. Too often, decisions by judges or juries are based more on emotion than on facts or the law, and frequently the result is a catastrophic damage award that wipes out a lifetime of hard work and investment. A well-designed asset protection plan builds a protective fort around the client's estate and guards family wealth from external creditor attack and frivolous lawsuits. The most effective asset protection fortress contains multiple layers of protection, so that even if they can defeat one device, there are other defenses around the family's nest egg. Asset protection is, therefore, an essential fundamental building block of financial planning.

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Many people question whether even the most complicated and sophisticated asset protection plan actually defeats creditor's claims, especially where the asset protection plan is designed and implemented close to a judgment being entered or a lawsuit being filed. Evaluating the effectiveness of asset protection depends on having realistic goals and objectives. If by asset protection a person means becoming 100 percent judgment proof, then successful asset protection is difficult, especially if not done several years before problems arise. If, however, one's goal is to substantially improve their creditor protection and to place the majority of their assets beyond creditor attack, then asset protection success is obtainable if done early and with the help of an experienced asset protection lawyer.

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In Florida, our home is truly our castle, a castle that is impenetrable by creditors. The Florida Constitution exempts homestead property from levy and execution by judgment creditors. Florida courts have liberally expanded definitions of homestead property which includes more than just a single family house. Condominiums, manufactured homes, and mobile homes are also afforded homestead protection. The Constitution defines homestead as one's principal place of residence up to one-half acre within a municipality and up to 160 contiguous acres in any county in Florida. To qualify for homestead protection, a debtor must be a Florida resident and must reside on the homestead property.

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Received an interesting question from a litigation attorney today about fraudulent conveyances. His client had a parent in the hospital with a short life expectancy. Received an interesting question from a litigation attorney today about fraudulent conveyances. His client had a parent in the hospital with a short life expectancy. The parent owns a 50% interest in a homestead property in Florida, and he has a $100,000 in a bank account designated pay on death to child. Question posed was whether parent should withdraw cash, give money to the child, in order to avoid the hospital and doctors going after the money to pay medical bills.

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A very good source of articles on asset protection planning is available on the website of attorney, Alan Gassman who practices in Clearwater, Florida. . Updates & Articles, Gassman & Associates, Clearwater, FL USA. Alan has posted many accurate articles on his site about many aspects of asset protection. Particulaly helpful are his postings related to medical practice, medical regulation, and physician asset protection.

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In March, 2001, the Florida Supreme Court decided the case of Beal Bank v. Almand where the Court adopted the presumption of tenants by entireties ownership for bank accounts owned jointly by husband and wife. Since then most attorneys assumed that all personal property owned jointly by spouses was presumed tenants by entireties property. This is important because tenants by entireties property is exempt from levy by creditors of either the husband or the wife individually. However there is one bankruptcyopinion which has taken a different view, and which has limited the Beal Bank decision to apply only to bank accounts.

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On January 29, 2004, the Florida Supreme Court issued an opinion in the case of Freeman v. First Union Ntl Bank which is important to attorneys and others involved in Florida asset protection planning. Some creditors and their attorneys have attempted to thwart asset protection planning by attacking debtor's attorneys and their financial institutions for their part in assisting fraudulent conveyances. The Supreme Court held that the Uniform Fraudulent Conveyance Statute (UFTA) as enacted in Florida does not provide a basis for claims against third parties of aiding and abetting a fraudulent conveyance. .

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