Some people are confused about the protection from creditors afforded to life insurance owned by Florida residents. Florida statutes state that cash value of life insurance, in whatever form, owned by the insured is exempt from the owner’s creditors.
Florida Statute 222.21 protects from creditors financial assets that qualify under specified sections of the Internal Revenue Code to include most IRAs, 401k plans, and other common tax “qualified” retirement plans.
Retirement plans that are established under a body of federal law referred to as ERISA ( Employee Reitement Security Act of 1974) are protected from creditors pursuant to Florida Statute 222.21.
529 Plans are named under the section of the IRS code that creates and regulates them. These plans provide for a way for a parent or grandparent to invest and save for a child’s education.
Received an interesting question from a litigation attorney today about fraudulent transfers and conversions. His client had a parent in the hospital with a short life expectancy. The parent owns a 50% interest in a homestead property in Florida, and he has a $100,000 in a bank account designated pay on death to child. Question posed was whether parent should …