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

Wages paid to the head of household are exempt from creditors, and the wages remain exempt for six month when deposited in a bank account. Many potential debtors set up separate bank accounts which they title as a "wage account" in which they deposit their wages and salary and no other money. The purpose of the wage account is to segregate protected wages and not commingle wages in accounts with money from other sources. The concern is that if the head of household deposit wages in a checking account owed jointly with the spouse or owned by another entity, such as a living trust, the wage protection would be lost. But, are separate wage accounts always necessary?

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Many people who contact me by phone or email present questions about other asset protection tools they read about on the internet or hear from friends. Many asset protection plans sponsored by people who are not attorneys are actually scams. As asset protection becomes more popular, and more people facing lawsuits reach out for help, ineffective and expensive asset protection plans marketed under enticing names proliferate around the country.

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An investor writes by email that he lost money in a fraudulent scheme for "gourmet coffee distribution." The bad guy says the investors can't touch his Florida homestead. The victim states that he read somewhere that creditors can put an equitable lien on a homestead if the creditor can a judgment based on fraud. He wants to know if he should sue the bad guy for fraud and put a lien on his house. In this case, I think the homestead would be totally protected even though the investor was defrauded.

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A judgment is entered in favor of the defendant and against the plaintiff.. The plaintiff files an appeal. The defendant asks whether transfers of non-exempt assets to his spouse after his win in the trial court could be attacked as fraudulent conveyances in the event he loses the appeal and the plaintiff's case is reinstated.

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Is your homestead protected if title is held in a Roth IRA? That is a question asked by a recent caller. I have not seen a case on the issue directly. I believe the answer will be "yes" if the beneficiary of the IRA lives on the property.

The Constitution limits homestead protection to "natural persons." A property owned by someone's corporation or family partnership probably would not be homestead protected. Yet, many Florida court decisions have held that a person claiming homestead need not hold legal title to the property so long as he has a beneficial interest. Several Florida courts have held that ownership through a living trust- where the debtor is settlor and beneficiary- qualifies as ownership by a natural person.

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An Orlando Florida bankruptcy judge issued a decision in one of my client's cases which included interesting holdings and valuable instructions on the issue of tenants by entireties bank accounts. My client and her future husband opened a joint bank account. They proceeded to marry. The money in the bank account on the date of their wedding was spent, and over the years it was replaced with new money acquired during their marriage up until the time the wife filed bankruptcy. The question was whether the money in the account was exempt as a tenants by entireties asset.

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A client had been sued by bank for default under business promissory note. He stated he was concerned that when he got the loan he submitted to the bank a financial statement that exaggerated his assets. He fears that the creditor will prosecute him for fraud because he submitted a false financial statement to procure a loan. In this case, the loan was secured by collateral.

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A client has a professional license in Florida. The license is a valuable asset to the client. The client asked whether his judgment creditors can levy on his license. The answer is no. Professional licenses are personal to the licensee and are not assignable. The judgment creditor cannot have the license put in the creditor's own name nor can the license be sold to anyone other than the licensee. The debtor's license has no value to anyone other than the debtor/licensee. Other licenses, such as liquor licenses, are subject to execution and levy because these licenses not personal.

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People living in states other than Florida occasionally ask for my help in finding asset protection advice in their state. Its not easy. Generally, larger law firms are reluctant to provide asset protection planning for several reasons that I have discussed in previous posts. Attorneys working in asset protection are concentrated in a few states including New York, California, and Florida (because of Florida's liberal homestead laws). People in lesser populated states and in states whose laws provide fewer asset protection options will find it more difficult to get asset protection advice.

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