What Happens to Community Property Rights When You Become a Florida Resident?

Jon Alper Creditor Rights, Limited Partnerships and LLC

A client, a married man, acquired and owned a LLC membership interest in his own name while living in Texas. He and his wife moved to Florida. A Texas court entered a money judgment against the wife only, and the creditor moved the judgment to Florida. Texas is a community property state; Florida is not a community property state. Under community property law each spouse has a separate 50% interest in the other spouse’s property acquired during the marriage so that the debtor wife acquired in Texas a community property right in her husband’s LLC investment. The judgment creditor seeks to levy upon the debtor wife’s community property interest in Florida.

The clients asked me whether the wife’s judgment creditor can use community property principals in Florida courts to get a charging lien upon the separate 50% interest in her husband’s LLC membership share. Under Florida law the debtor wife would have no interest in her husband’s LLC ownership.

The general rule is that the wife’s creditor can use Texas community property principals to get a charging lien upon her 50% community property interest. Florida law does not create community property rights, but Florida law imports community property rights from other states. The debtor’s rights in her non-debtor husband’s LLC interest vested while the couple resided in Texas. The couple moving to Florida did not destroy the wife’s community property interest. There are some Florida cases and a Florida statute that are pertinent.

The joint community property interests in the LLC does not become an exempt tenants by entireties assets when the couple become Florida residents because community property rights are separate and do not include survivorship at death.

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