What Every Floridian Should Know about Asset Protection
Florida has favorable laws that help protect assets from creditors. There are also strategies that an experienced Florida asset protection lawyer uses to protect assets. Without these protections, creditors can seize and sell these assets. With these protections, family members and loved ones can enjoy the assets.
Good asset protection doesn’t mean that creditors can’t get judgments. It means that they will have difficulty collecting on those judgments. This difficulty can make it much easier to settle claims. It also provides protection against the seizure/taking of the assets.
The Florida Homestead exemption
The Florida Constitution provides a strong asset protection method for Florida homeowners. It’s called homestead protection. (Florida Constitution. Article 10, Section 4). Creditors cannot seize exempt homesteads. Homesteads include condominiums, mobile homes, and single-family homes. The home must be the homeowner’s principal and primary residence. The homeowner must reside permanently in Florida. There are some size limits. There generally aren’t any value limits.
The homestead exemption does not apply to investment property. Homes must be in the name of natural persons – not LLCs, corporations, partnerships, or irrevocable trusts. Living trusts and land trusts may qualify.
There are rules and exceptions an experienced Florida asset protection lawyer understands. These include rules on transferring homestead property. If money was obtained fraudulently to buy the home, then creditors may be able to seize the property. Generally, the right to the homestead exemption begins the day you first move into the home. Co-owners should also live in the home.
There are some exceptions. Mortgage holders can repossess your home if the mortgage is in default. The protection doesn’t apply to certain types of liens such as:
- Mechanics liens
- Tax liens
- Liens that began before home occupation
Practical suggestions an experienced Florida asset protection lawyer may suggest
Some practical suggestions many property owners can use to protect their assets include:
- Titling property as tenants by the entirety. Married couples who title their home as Tenants by the Entirety are generally safe from creditors. Unless both spouses owe the creditor. If, for example, the husband dies first, the property passes to the wife. If the wife dies first or the spouses divorce, then the creditor can seize the house.
- Creating a corporation. A properly crafted corporation (usually of your business) can provide asset protection. The corporation should keep proper records. Corporations run by just one or two people are more subject to attack than corporations with multiple owners. Businesses owned by a partnership or a sole-proprietor are generally not protected from creditors.
- Limited Liability Corporation (LLC). An LLC is generally harder to attack than a standard corporation. Like the LLC though, the more members in the entity, the harder it is for the corporation to attack.
Other strategies that respected Florida asset protection lawyers use include:
- Various types of irrevocable trust agreements
- Family limited partnerships
- Asset protection trusts created in states that are hard to attack
- Explaining when creditors can and can’t attach wages
While the best course of action is to avoid debt, sometimes debt can be unavoidable. A car accident where there is not enough insurance can result in a judgment – if the senior caused the accident. This is one reason cars are often titled in the name of the principal driver. Many seniors have expensive medical bills that aren’t covered by Medicare, Medicaid, or personal insurance. Other events can create unexpected debt as well.
Contact an Experienced Estate Planning Lawyer
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