Not a day goes by that I don’t get a call about asset protection. While some states extend some form of creditor protection to its residents, Florida law affords its residents a significant level of protection. Individuals should be aware that, in order to benefit from some aspects of creditor protection, affirmative steps may need to be taken PRIOR to financial or creditor concerns.
Here are some of the basics:
Florida exempts real property classified as homestead property from claims of creditors. An individual must meet certain requirements and must take certain steps to qualify a home as a homestead property. For example, you must intend to permanently reside in Florida, have legal or beneficial title in equity to the real property on January 1, reside on that property and make the property your permanent residence.
Florida law also provides that life insurance proceeds pass to the exclusive benefit of a beneficiary and are exempt from creditor claims of the insured, unless the insurance policy has been pledged as collateral.
Florida Statues exempt cash surrender value of life insurance policies that insure the life of a Florida resident, as well as, the proceeds of an annuity contract issued to a Florida resident.
Retirement benefits, such as qualified retirement plans and IRAs, are generally exempt from creditor claims of the beneficiary and the participant. Florida Statues further provide that assets placed in a medical savings plan, college trust fund account, or 529 Plans also protected from creditor claims.
Finally, ownership of assets by spouses as “tenants by the entirety” is also protected. Creditors of either the husband or a wife cannot reach these assets. In Florida, in order for creditors to attach property held as tenants by the entirety, the creditor must be a creditor of both the husband and the wife.
