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

I recently read seminar materials about asset protection from income tax debt which had been published by Larry Heinkel www.taxproblemsolver.com. Larry is an expert in the area of income tax debt in bankruptcy. His article pointed out some common misunderstandings about tax debts. First, Florida's homestead law does not protect homeowners from income taxes. A tax lien attaches to your homestead unlike a civil judgment. Next, Florida's statutes prohibiting creditors from garnishing wages of the head of household does not protect against IRS collections. Also, a divorce decree which specifies which spouse is responsible to pay tax liability is not binding on the IRS. The IRS can go after either divorced spouse for the full amount of tax debt.

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I received an email from a prospective creditor located in Georgia. Allegedly, one of her family members serving wrongfully took money from an decedent's estate. The same family member moved to Florida and purchased a Florida homestead. A Georgia judge has ruled that the executor committed fraud. Can the family members who are beneficiaries of the estate get a lien on the executor's Florida homestead?

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One of my new clients told me about an asset protection tool he implemented upon the advice of another attorney. The attorney had told him the protection was "ironclad." I disagree. The client and his girlfriend each established an irrevocable trust for the benefit of one another. The trusts were identical, and each person funded the trust with the same amount of money. The trust documents had spendthrift provisions which prohibit a creditor from levying upon the interest of the respective beneficiaries. Each person served as trustee of their own trust and had the discretion, but not the requirement, to make distributions of income or principal.

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Someone called me today about protection from alimony and support judgment emanating from a divorce. The question was whether a spouse can avoid contempt for non-payment if the spouse's normal job requires constant travel and relocation around the United States. The general rule is that most asset protection tools do not protect against marital decree liability. Marital courts have equitable powers to change ownership rights in property otherwise exempt from general judgment creditors. A judge can hold a divorced spouse in contempt simply for not paying court prescribed marital debts.

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The general rule is that social security benefits are exempt from garnishment. There are exceptions to most rules. One of my clients had retired from a government agency, and the government claimed the client owed the government money. The agency represents that they have the right to a lien on all government benefits, including social security payments. The agency did not cite a statute or contract right. However, the government's position makes sense. If you owe money to the IRS you cannot receive a tax refund. Similarly, if you owe money to another government agency it seems reasonable that agency have a lien on government pensions and other benefits. As with tax debt, asset protection rules are often different when the creditor is the U.S. government.

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