Tenants by entireties bank accounts are exempt under Florida law and cannot be garnished by a creditor of either spouse. However, entireties accounts of Florida residents are more difficult to enforce in courts outside of Florida.
A creditor of one of our clients is attempted a creative way to garnish the client’s entireties account. The client resides in Florida and maintains an entireties bank account with his spouse at a national bank. The creditor sued the client in Florida and obtained a Florida court judgment. The creditor likely knew it could not garnish the client’s bank account in Florida. So, the creditor domesticated the Florida judgment in Georgia and obtained a Georgia judgment. The creditor then had the Georgia court issue a writ of garnishment and serve the writ on a Georgia branch of the national bank. Georgia law does not recognize a tenants by entireties exemption from judgments. The client must hire a Georgia attorney to convince a Georgia court to dissolve the garnishment. This may be difficult because Florida property law and exemptions do not apply to assets located in another state. The legal issue in Georgia is going to be whether the bank account of a national bank is physically located in Florida were the owners reside or is it located in any state where the bank has a branch.
This issue could have been avoided if the client was proactive. The client had at least 30 days’ notice of the Georgia domestication action. The client had no Georgia property, so it was clear at that point that the creditor’s attorney was trying to use Georgia’s creditor-oriented laws to collect the judgment. At that time, the client should have moved all financial accounts to banks and other institutions that had no branches or offices outside of Florida.
The general rule is that accounts of national financial institutions are located where the debtor resides. This provision is in the deposit agreements of most national banks and financial services companies. There are also court decisions that prevent creditors from garnishing bank accounts in foreign states. If this were not the law, account owners would be forced to defend garnishments in multiple jurisdictions. However, when a Florida debtor has a judgment entered in a foreign state, or as in this case sees that a creditor is trying to create a foreign judgment, the safest course is to move all financial accounts to local Florida institutions.