Interesting Question About Salary Exemption
Interesting question from a client today about salary exemption. Florida statutes exempt from creditor claims salary and other compensation from services of the head of household. To be head of household you have to be providing more than 50% of the support of another person for whom there is a moral support obligation. The supported person does not have to be a child or spouse, and there is no age limitation. Supporting an elderly parent may qualify you as head of household.
This particular client said he paid his father's ongoing living expenses including medical and other personal care. His father, however, also had substantial liquid assets which if liquidated would more than pay for his own care. The client supported the father on an ongoing basis because the client had far more assets and income. The issue was whether the client could be head of household by virtue of his support of this father when his father had no income but had sufficient assets.
I am not sure of the answer, and I do not know of any cases on point. The statute does not refer to any financial criteria of dependency and does not refer to the net worth of the dependent. My interpretation of the statute is that the test is based on who is paying, out of pocket, the ongoing support expenses regardless of net worth. The statute does not specify that the person being supported demonstrate that he needs all the support he is receiving, or that the head of household is the sole source of support. Based on a literal interpretation of the statute, the client in this instance probably would qualify as head of household by virtue of his payments of his father's daily living expenses.
On the other hand, a literal reading of the statute may not be fair in this type of case. If a creditor challenged salary exemption in this type of situation a court could find that the client was not entitled to salary exemption because his father was not his dependent, or that he was not morally obligated to pay his father's living expenses, since his father had assets sufficient to pay for his own maintenance and support.
posted by Jonathan Alper, asset protection and bankruptcy lawyer, Orlando, Florida
