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

Florida asset protection law sometimes make important distinctions between protected assets and the proceeds of those assets in the debtor's hands. For instance, Florida Statute 222.14 expressly protects both annuity contract and annuity proceeds. Other laws protecting assets do not deal with proceeds therefrom. Today, a caller inquired whether disability proceeds and proceeds from the refinance of a homestead remain protected in his bank account. Florida Statute 222.18 protects disability income benefits under any insurance contract, but the Statute makes no mention of disability proceeds. Similarly, Florida's Constitutional homestead provision does not address proceeds from the sale or refinance of homestead property.

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My clients often suggest asset protection techniques that appear clever and effective at first glance, but will not work against an experienced creditor attorney. One such idea is for the debtor to pay his civil litigation attorneys large sums of money in advance of legal services defending the creditor's collection efforts. The theory is that the debtor's money is protected in their attorney's hands under some variation of attorney-client protections. Another reason for this plan is to make sure the debtor can fund his legal defense against collection efforts. This plan is built on incorrect assumptions and will not protect the debtor's money against a skilled collection attorney

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An attorney outside of Florida called me about his clients' plan to protect assets by purchasing a home in Florida. The attorney anticipated that a judgment may be entered against the client within the next few months. The client owned and operated a real estate construction business in Arizona. Arizona is a community property state which has no tenants by entireties ownership for husband and wife. The attorney proposed that the client buy a house in Florida jointly with his wife after which he could protect the house and jointly owned financial assets, and most importantly, his construction business, as tenants by entireties property. The client would obtain a Florida drivers license and voter card.

I told the attorney that the house may be a protected tenants by entireties asset but that this judgment debtor could not protect his jointly owned personal property under the tenancy by entireties immunity.

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Creditors enforce money judgments by getting a writ of execution from the court allowing them to levy on a debtor's assets. I received an email from a Blog reader which puts forth an interesting argument that a creditor's writ of execution is good only for one year. Rather than summarize the argument, I will publish the entire email below for consideration.

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I have previously written on this blog about out-of-state courts trying to stop debtors from evading money judgments by moving to Florida and buying a house. Judges in other states are issuing orders imposing an equitable lien or a constructive trust on the debtor's Florida house in favor of the creditor on the theory that the debtor has "fraudulently" used money owed to the creditor to buy a Florida homestead. A recent opinion by a Florida bankruptcy judge explains Florida law's requirements to impose a constructive trust and equitable lien on Florida real estate.

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I read a relatively recent bankruptcy court ruling that examined in unusual detail a debtor's claim of tenancy by entireties protection of a variety of assets owned jointly with his wife. The decision upheld entireties protection of the debtor's furniture and other personal household property but denied tenancy by entireties ownership of a joint mutual fund account. The facts and holding are instructive for other Florida debtors relying on tenancy by entireties.

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