Posted on May 31, 2010 by Jonathan Alper

Florida Tenants By Entireties Protection Available To Debtors Living Outside Florida (Anywhere In The World)

I often receive phone calls from out of state resigned that they cannot achieve any of Florida's asset protection benefits because they do not reside in Florida- not exactly. While it is true that Florida's statutory creditor protections are specifically limited to Florida residents and Florida homestead presume permanent Florida residence in the house, Florida law does include asset protection available to non-residents, and even to people who have never set foot in Florida.

I’m referring to tenants by entireties protection available to a single debtor of a married couple.. Tenants by entireties protection from individual creditors is based on Florida common law defining Florida property. The concept applies to Florida property regardless of the owners’ residence. I wrote a post on this topic last year, but its worth repeating for current readers because most callers from outside Florida still think they have to move into their Florida house as a homestead in order to protect the house from judgments.

If a married couple living in any state in the United States buys real property in Florida that property is considered owned tenants by entireties and is exempt from judgment creditors of either spouse. Regardless of where the debtor resides, and regardless of where in the U.S. the judgment was entered, the creditor will have to domesticate the judgment in Florida to lien the debtor’s property. The foreign (out of state) creditor of one spouse will find that Florida law will not permit him to attach his judgment to the debtor’s jointly owned Florida real estate.

People do not have to move to Florida to used tenants by entireties law to exempt real estate they purchase in Florida.
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Posted on February 5, 2010 by Jonathan Alper

Sometimes The "Low-Risk Spouse" Gets Sued: Why Effective Asset Protection Is For The Whole Family

Often, a high-risk professional will title all assets in the name of their non-professional spouse as an asset protection plan. The professional thinks they are a lawsuit target, but in the event they are sued, they could tell their adversary that they "have nothing in my name." It’s a simple plan, but it sometimes backfires. Here’s an example where putting everything in the name of low risk spouse did not work out.

A woman physician worked in a high-risk specialty. Her husband worked for a large company in a non-professional job. The couple bought investment real estate and titled all parcels in the husband’s name alone. Their bank accounts were in the husbands name, as were some non-retirement stock accounts. You can probably guess what happened.

The husband called me for asset protection advice because he had been at fault in a serious car accident. He had only $20,000 liability insurance. All of the assets titled in his name, and bought mostly with his wife’s earnings, were at risk. Fortunately, the car he was driving was also in his name only so his wife would not be liable for the car accident. What did they do wrong?

This couple made two mistakes. First, they should have titled their investment assets as tenants by entireties rather than in the husband’s name alone. Assets titled in the entireties would be exempt from the husband’s car accident liability as well as from the wife’s professional liability. Entireties protects against any judgment against just one spouse. If each spouse has a judgment from a different lawsuit and for a different reason the entireties protection works against all the judgments.

The second mistake is lack of adequate insurance. In Florida, both the driver and all car owners are responsible for car accidents. If one spouse is driving a car owned jointly or in the name of the other spouse both spouses are held liable for the full amount of damages. If you have significant assets in the family you must get a large umbrella insurance policy to cover automobile and homeowner liability.

You may think you know whom in the family is going to be sued and for what reason- such as, the dreaded professional malpractice liability. Sometimes its what you don’t expect that gets you. Both spouses and all assets must be protected in a property asset protection plan.

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Posted on January 24, 2010 by Jonathan Alper

Tenants By Entireties Account Destroyed By Couple's Treatment Of Funds

Husband and wife open a joint bank account at a Florida bank, and on the signature card, they pencil in the words "tenants by entireties" to express their intent that the account be an exempt entireties account. Subsequently, the deposit in the account money from another joint bank account and a joint income tax refund. These facts support clearly the conclusion that all money in the account is owned tenants by entireties, and assuming no fraudulent transfers, the money is protected from the individual creditors of either spouse. It would seem very difficult for a creditor or a bankruptcy trustee to defeat the entireties exemption- not exactly.

A decision by a Florida bankruptcy court found that a husband and wife with the above facts could destroy their entireties exemption by their actions and testimony after this account was opened and funds deposited. Here are the most important facts which undid the couple’s exemption.

After the deposit of the joint tax refund and money from the prior joint account the husband wrote a check for half the total amount to his wife who proceeded to deposit her half in her individual bank account. The husband testified that he viewed all remaining money in the account as his money, and he wrote all of the check on the account and was liable for all debts that were paid from the account. The court found that the husbands testimony and the facts established that the joint account was a joint tenancy with survivorship but not an entireties account. The court said that husbands actions had the legal effect of disclaiming entireties ownership and overcoming the legal presumption of entireties under Florida law.

I was surprised by the legal ruling because I had thought that once the couple established the account as an entireties account the funds therein were exempt regardless of what they chose to do with the money thereafter. However, I also see the judge’s point that the couples intended to segregate the wife’s half interest in the original deposits in the wife’s own account leaving what the couples believed was only the husband’s money. The case shows that couples should be careful to maintain entireties accounts under their joint custody and control, and not to split off the interest or funds belonging to the non-debtor spouse. The case is In re Underwood. No. 08-411, Adv No. 08-140, decided September 29, 2009.
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