Proceeds From Homestead Refinance
A email asked whether proceeds from the re-finance of homestead owned by husband and wife are protected from creditors under Florida law.. It depends what the owners do with the money. Assuming the homestead is owned jointly and net refinance monies is deposited in a joint checking account, then the money would be protected as tenants by entireties money from the creditors of either spouse individually, If the money was put in a financial account titled in the name of just one spouse and that spouse had judgment creditors, or if it were deposited a joint account and both spouses and both spouses had judgment creditors, the money would not be protected from creditors even if it came from the refinance of a homestead.
If refinance proceeds would be at risk if deposited in financial accounts, the homeowners should seek financial advice to invest the money in protected assets. For instance, the homeowners with creditor problems could use the net refinance proceeds to purchase an annuity contract for their own benefits. Annuities have broad protection under Florida law. Alternatively, the couple could invest some or all of unprotected proceeds in a 529 college plan. Because homestead properties are exempt assets the transfer of money from a homestead to a protected financial asset should not be reversible as a fraudulent asset conversion. If money is to be placed in a protected financial investment, such as an annuity or 529 plan, the homeowners should purchase the financial asset by money wire or check directly from the title company closing in order to avoid depositing funds, even for a short time, in a non-exempt bank account.
posted by Jonathan Alper, asset protection and estate planning attorney, Orlando Florida
