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The strength of Florida’s debtor-friendly laws stems from three legal sources: The Florida Constitution is the fundamental and most consequential Florida legal document, and it sets forth Florida’s most important protections, including Florida’s well-known homestead protection. Some people believe they can move assets offshore to protect the assets from IRS collection or from the assets being subject to U.S. income tax. Both financial and legal expertise is needed to craft a sound asset protection plan, especially if you have significant assets to protect. Transfers done in the face of a legal threat may withstand fraudulent conveyance attack when properly planning minimizes badges of fraud. No evidence that the agreement was obtained by duress. Your second question is a bit confusing as I’m not sure what you mean by the myrtle personal property. I’ll then offer an overview of various asset protection strategies used in Florida. Offshore tax evasion is criminal. Land trusts in Florida essentially convert “real property interest” into a “personal property interest” by virtue of a contract between the land trustee and the trust beneficiary. In other states such as California, there are strict limits, such as only protecting up to $9,700 for an individual or $19,400 for a married couple. If the home is in the county, then the exemption applies up to 160 acres of contiguous property. It is my only home and I travel north during the hot summer. Common types of business entities are limited liability companies, corporations, and to a somewhat lesser extent limited partnerships. Reorganization of asset titles and asset transfers done before creditor problems arise are effective if liability does eventually arise. An asset protection trust is irrevocable, meaning that any transfer of assets into the trust is permanent.In other words, the trust would own the assets in question and they would be managed by the trustee. This concept means that the assets that are owned by the LLC would also be protected from creditors. Asset protection starts with common sense planning. Although most people think of LLCs as used for operating a business or investment real estate, LLCs can also be used for holding other assets like art, antiques, boats, stocks, and bonds. So, the kinds of liability in Florida that we are trying to protect against are: The options/strategies that are available for asset protection in Florida are: Florida Asset Protection for Annuities and Life Insurance, Florida Asset Protection for Qualified Accounts [IRAs and 401(k)s], Florida Asset Protection for Business Entities, Florida Asset Protection for Limited Liability Companies, Florida Asset Protection for Corporations, Florida Asset Protection for Limited Partnerships, Florida Asset Protection and Marital Agreements [Pre-Nuptial and Post Nuptial Agreements]. is the Managing Attorney of Gibbs Law Office, PLLC and is licensed to practice in Florida, and California. Don’t get me wrong, an annuity can be a solid financial choice under proper circumstances. Hello Marion, thanks for reading and for your comment. If you have additional questions, I recommend you connect with our legal director Gene Ross at admin@gibbslawfl.com to schedule a confidential individual discussion. For example, people should not rely on oral promises and oral agreements in your business dealings as they often result in confusion and misrepresentation. Wealth replacement trusts in Florida a/k/a irrevocable life insurance trusts (ILITs), GRATs, GRUTs, and charitable trusts are irrevocable trusts that are often utilized more for tax planning than simple asset protection. If I have IRA RMD that is FAR in excess of what is needed to support my family, are those excess distributed funds subject to claims of a creditor (eg a judgement in an auto lawsuit)? Florida asset protection is a legal process where a debtor structures his or her assets—such as property, cash, businesses, and investments in such a way that makes it much more difficult for a current or future creditor to collect on those assets. Rather than addressing these 6 liability types individually, the strategies to be discussed should cover them all with some additional recommendations concerning our super-creditors, the IRS and the aggrieved spouse in a divorce action. So, considering what judgment creditors can do to try to get your assets, and remember that assets are defined as the stuff of ours that is either income-producing or appreciating, the next question becomes how to utilize the most effective strategies available in order to protect these assets. For a business owner, a creditor may be anyone who enters your place of business. Some state laws extend this to traditional IRAs as well. Date Night. If your State allows it, you can title your personal residence as “Tenants by … You can learn more about business asset protection here. The most prevalent asset protection mistakes include: We help people go through their assets and income and determine what is at risk of collection from a judgment creditor. A creditor may also be a bank, business partner or individual who loaned you money or entered into another kind of business deal with you. If you are a business professional or if you own a business, you could be hit by any of the following: 1. Traditionally, this structure has also placed all of the liability of the general partner for decisions made and actions taken on behalf of the partnership. Results portrayed are dependent on the facts of that case and the results may differ if based on different facts. Asset Protection . This article will attempt to simply this concept by first defining what asset protection is as a critical part of a complete Florida estate planning strategy. The generous protections provided by the Florida constitution, Florida statutes, and Florida common law make Florida one of the most debtor-friendly states in the country. Asset protection strategies, like insurance, are best used before a problem arises. A corporation in Florida is filed similarly to an LLC in that articles of incorporation are filed with the secretary of state in the state of incorporation. I would use the money to pay back rent and bills i’m behind on. However, although there is NO asset protection from creditors for the trustmakers of a revocable living trust, a Florida revocable living trusts DOES offer asset protection for beneficiaries upon the death of the last surviving trustmaker because the revocable living trust becomes “vested” and irrevocable upon that death. Hello Larry, thanks for commenting. The current trend in Florida is to use LLCs instead of limited partnerships because a controlling partner doesn’t need to assume unlimited liability and all of the other purposes of a limited partnership may be accomplished by allocating different “classes” of membership interest in the LLC. Required fields are marked *. Unless you take steps to protect them, most assets are not protected in a lawsuit. Qualified accounts that are exempt under state laws from creditor attachment include IRAs, Roth IRAs, and Keogh plans (tax deferred pension plan geared to self-employed individuals). Florida Asset Protection Summary Homestead Exemption. Full disclosure of all assets by both spouses and a full financial statement attached to the agreement. It is important to remember the important distinction that a Florida revocable living trust offers the trustmaker no asset protection from creditors, whereas a Florida irrevocable trust can offer this protection. For the unprotected items, developing and evaluating legal options to better protect those assets from collection. By removing those assets from your ownership, you can protect them against creditor lawsuits. Remember, to be wary of asset protection advice as there is all kinds of marketing and potential misinformation concerning various products and the level of protection. Whereas the rules concerning homestead protection and qualified accounts are somewhat “cut and dry” it gets a bit more interesting in the following sections because contractual language may be used to “enhance” your asset protection. One of the few exceptions to this is your employer-sponsored IRA, 401(k), or another retirement account. Same for Social Security income. I know that a bank account is not protected. Promissory notes and mortgages are usually drafted heavily in favor of the lender creditor, and any kind of legal dispute will be extremely expensive. Most retirement income is exempt in Florida both from source and after deposited into bank account so long as segregated and traceable. Many states offering an “in between level” of protection allow approximately $70 – $170,000 of homestead real property value to be claimed as exempt from creditors in a state action or bankruptcy proceeding. If you have collection concerns, I highly suggest you connect with someone who regularly practices commercial litigation, something we don’t get involved in at this point. In general, a inherited IRA is asset protected by FL Statute. Can a licensed Florida, non resident agent ( Maryland resident agent) transfer a rollover IRA account to another rollover IRA account for a Florida resident, and have Account and the income from the account be protected from civil law suit and bankruptcy. Limited partnerships and limited liability companies are used for asset protection of businesses or investment assets. And we would be doing this AFTER the lawsuit was filed but Before a trail and knowing the outcome of that trial… Currently I have no official judgement s against me, but i likely will lose this lawsuit in process. The federal government ensures the safety of these accounts to protect retirement even in case of a lawsuit. In most cases, you cannot make changes to protect your assets if there is a lawsuit pending against you. I always attempt to take the conservative approach when offering assurances to the public and my original findings were supported by the asset protection society as per this chart: http://www.assetprotectionsociety.org/pdf_files/APS.50.State.Summary.pdf. You also need to understand your options and why it may be too late to protect your assets from certain active creditors due to what is called “fraudulent transfer laws.”  You need to create an asset protection strategy while things are good and the sun is shining. Grantor retained interest trusts (GRATs and GRUTS). Form a trust to hold your assets. Asset Protection Trust. If a judgment is entered against you in Florida, the judgment creditor can find out your financial information and begin to collect on the judgment. The idea is that both parties have a chance to deliberate, seek the advice of counsel and confirm the consequences of signing any marital agreement. jt. While the above are protected classes of assets, there are some classes of assets that offer little or no protection, which are: Whether the family residence is protected from creditors will largely depend upon the state’s laws and the amount of protection that is allowed. thank you for great information. It is not too late to engage in some asset protection before a judgment creditor actually obtains an interest in your property by lien or execution. Common law is law established by appellate judges in individual cases. An annuity is a financial product created by the insurance industry that provides a rate of income at a contractually agreed rate. Like all states, Florida has a set of exemptions you can use to protect property—such as a home, car, or retirement account—when filing for Chapter 7 or Chapter 13 bankruptcy. The downside is that, in many jurisdictions, the corporation is also easier for creditors to attack because corporate stock has traditionally been subject to judgment liens and creditors have historically been able to force the sale of corporate stock in order to satisfy judgments. However, these types of trusts are irrevocable and thus offer asset protection benefits. Generally, my understanding is that the IRA proceeds are protected but distributions wouldn’t be. How to Open a Tenants by Entireties Account at a Florida Bank. I also differentiate between “income producing” and “non-income producing” assets and this is simply a question of whether the asset is creating income for the owner. This is a quality article. Another important point is that there are exceptions to Florida homestead protection that generally include the default of your home mortgage because the mortgage is secured by a security interest in the home. That said, you can certainly make an argument that a private annuity contact is creditor protected. Thank you so much for the Excellent article to help us seniors living in Florida. Even if you’re not a Florida resident or investor, I encourage you to read on because the concepts to follow will serve as an overview of the issues and options that are available for asset protection in your home state or other jurisdiction of your choosing. Is it legal to get a title loan on your car (place a legal lien on it with FL DMV) not from family but a known friend (from his business actually). People can reduce legal risk and lawsuits by planning and minimizing unnecessary risks in their personal and business dealings. The steps in asset protection planning include: Asset protection planning should result in knowing what is at risk and what to do about it. So how do we protect our assets from gold diggers? Beyond that I would say is wishful thinking. Actually, a creditor may even place a lien on a homestead in my experience but cannot force a sale of the home. In Florida, it is important not to confuse the homestead tax exemption from the exemption that is applicable for asset protection purposes both under the state laws as well as the federal bankruptcy laws in that state. Florida common law protects property owned jointly by a husband and wife from the creditors of either spouse, using a type of ownership called tenants by entireties. Due to a divorce I am now without full medical coverage and in May I was in the hospital for 3 days and I now have about $30 K in bills from the west coast. Finally, there are protections based on what is referred to as the common law or legal tradition. From a liability lawsuit proceeds protected a sound asset protection planning with offshore planning. A guarantee, warranty, or even after a 30-year marriage without exemption turns out you are far more homestead! 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