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

One of biggest problems for people facing foreclosure of investment property in today's real estate recession is tax liability for the difference between the mortgage balance and the value of the property at the foreclosure sale or at time of a deed in lieu or short sale. The Wall Street Journal reports that there is a bill in the House of Representatives to eliminate income tax liability for debt forgiveness for homeowners. The bill passed Ways and Means Committee, and according to the paper the bill has bi-partisan political support. The law if passed would remove a significant tax penalty for people facing the loss of real estate during the current market downturn.

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I don't gamble. Some of my clients who do gamble are facing civil judgments and are concerned about vulnerability of cash in their financial accounts. One such client recently returned from a Las Vegas on a gambling trip and reported that he lost most of the cash he had before the trip. I asked the client how he expected to prove that cash in his account before the trip to Vegas was no longer in his possession and in the possession of Las Vegas casinos.

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A real estate attorney alerted me to pitfalls in changing legal title to real property in the course of asset protection planning. To better protect real property from future creditors, many clients have told me that they have conveyed real estate that they purchased in their individual names to limited liability companies, corporations, or partnerships. Most often, people use quit claim deeds to make the conveyance. If a creditor records a certified copy of judgment against an individual that judgment becomes a lien on all real property titled in the debtor's individual name. The conveyance to another legal entity protects against the immediate lien on the real property, subject to any creditor argument of fraudulent conveyance. In general, such conveyance to entities from individual names is a good asset protection strategy. Yet, this attorney told me there are risks.

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