Exemption Of Annuity Proceeds Issued From Annuity Purchased Outside Of Florida
Some time ago I wrote a post about Florida residents who purchased an annuity for his own benefit before moving to Florida in a foreign state which did not recognize annuities as exempt from creditor execution. I assumed, for the question, that the annuity company was in the same state and that the annuity contract provided that the law applicable to the annuity is the law of the state where the debtor resided when he purchased the annuity. The post discussed whether the annuity would become an exempt asset when the debtor moved to Florida.
A few of my clients have mentioned the post, and have said they were concerned about their own annuities purchased in another state. The client asked me to do further research. I found bankruptcy cases which held that a debtor’s beneficial interest in an annuity is exempt regardless of where the annuity company or its owner are, or were, located.
The courts interpret the annuity exemption as applying to the debtor’s beneficial interest because the statute (222.14) exempts annuity proceeds. The court rulings imply that a debtor’s beneficial interest follows the debtor to Florida, and that when the debtor becomes a Florida resident his beneficial interest in the annuity is exempt regardless of where the annuity owner or the annuity company is located now or in the past.
An annuity contract may have a provision applying another state’s law to the interpretation of the annuity. I think the most reasonable application of that provision is to apply the other state’s law where there is a dispute regarding the contract’s interpretation and application, but that the same provision does not define the exemption of the beneficiary’s interest.
The distinction is similar to the issue of whether a Florida debtor can use a single member LLC for asset protection if the debtor forms the LLC in a foreign state whose laws provide that a charging lien is the sole remedy against all LLCs, including single member LLCs. I’ve said that the creditor’s rights to execute upon the Florida debtor’s LLC interest would be determined by Florida law if the debtor lived in Florida regardless of what state law applied to disputes among the parties to the LLC. I think the analysis is the same for the annuity exemption; the law applicable to exemptions and creditor rights depends upon the law of the Debtor’s residence.
Based on this post am I correct in assuming that My IRA (Opened at Schwab online while a I was a residnt of Ga) is fully protect from judgement now that I am a resident of Florida?
Please update this post as to wheather or not the same rules apply to an IRA opened in another state.
thanks