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

This Blog will be on vacation until October 2, 2005

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The new bankruptcy law effective October 17, 2005, makes it much harder for people to move to Florida and proceed immediately to file bankruptcy. Under the new law a person has to be resident of Florida for two years to take advantage of Florida's liberal bankruptcy exemptions. There is no waiting period for protection against civil judgments outside of bankruptcy court. There is an important exception to the two year waiting period for Florida exemption protection in bankruptcy, and that exception is the protection afforded to assets owned jointly by husband and wife as tenants by entireties when just one spouse files bankruptcy

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Does an elderly person lose homestead protection when they move out of their house and in to a nursing home? I received a phone call from a lady whose father had moved into a nursing home when there already was a judgment for unpaid alimony owed to his ex-wife. The daughter asked if the father's home was still protected from the judgment, and if not, could the father deed the home to the daughter and her brother.

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A reader sent me an email asking if proceeds from the sale of a homestead property would be protected in a bank account if the money were being saved to repair and improve a new property that the reader intended to occupy as homestead when repaired. The property presently was not in liveable condition

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I read a living trust agreement which attempted to use a "trust protector" in addition to a trustee for reasons including asset protection. Trust protectors are common in offshore trust planning designed primarily for asset protection. Trust protectors are less common in living trusts designed usually for estate planning and probate avoidance. This particular trust agreement included a trust protector whose stated powers included transfer of assets owned by the living trust to any other trust created for the benefit of the living trust beneficiaries regardless of who created the other trust. For example, if the trustmaker's parents or grandparents had themselves created an irrevocable or testamentary trust for the benefit of the settlor of the living trust, which other trust included asset protection provisions such as a spendthrift clause, the trust protector had the power to transfer all living trust assets to the other asset protection trust. Presumably, the maker of the living trust would argue that there was no fraudulent conveyance because the transfer was done by the trust protector without the consent or participation of the trustmaker.

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Many people will be filing bankruptcy between now and October 17, and some of these debtors will go into bankruptcy knowing they have some non-exempt property which will be taken by the trustee for the benefit of their creditors. One such prospective bankruptcy filer told me last week that he had over $1,000 of liquid assets which he was prepared to surrender to his creditors in bankruptcy. The person asked me if it was permissible for him to sell his assets (in this case, stock) and donate the proceeds to the Katrina victims.

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