A caller and prospective client called to ask whether his Florida annuity was exempt from creditors. The caller had purchased an annuity through the securities affiliate of his bank. The caller subsequently borrowed money from the bank, and the loan documents stated that the loan was secured by all assets held by the bank.
The caller believed his annuity was exempt because of the Florida statutes protecting annuities from creditors. But, he was concerned that the bank’s lending agreement gave the bank a security interest in the annuity.
Based upon the facts presented, and without the benefit of reading the lending agreement, I was concerned about the safety of this annuity. I have read similar lending agreements which clearly exempted from loan security IRA, pensions, and other exempt assets held by the bank. I had not seen express exemptions for annuity contracts. The caller did not know what assets, if any, were exempted from security in this case.
This annuity was issued by a national insurance company. The bank was simply holding the annuity on deposit. The caller said his loan agreement did not restrict the withdrawal or transfer of his money or assets at the bank. The simplest solution in this case is for the caller to ask the bank to deliver the original annuity contract to the caller as its owner. The annuity exemption from all creditors would thereby be assured.