Asset protection in Florida can save decades of hard work and investment from being collected by creditors. It is never too late to start asset protection. But it’s a complex area of law that often creates a lot of misunderstandings.
In this guide, we’ll explain the essentials of all things asset protection in Florida:
What Is Florida Asset Protection?
Asset protection in Florida is the name given to the legal process where a debtor structures their assets to make it extremely difficult for creditors to collect on those assets.
Although many people think asset protection completely hides assets from debtors, this is not true. Instead, it makes it very difficult for them to collect and strengthens the debtors’ position at the negotiating table.
Asset protection can be used at any stage of debt. It’s never too late to use and is sometimes even used after a lawsuit has been filed or a judgment has been entered.
However, proactive asset protection is the wisest strategy. This can be completed with the help of our Florida asset protection attorneys, who will:
- Review the legal situation and details of civil liability.
- Produce a list of assets and incomes, determining which assets are protected and which are vulnerable.
- Consider and utilize the available legal options to protect unprotected assets.
Common Examples of Asset Protection in Florida
Asset protection offers countless techniques for protecting many types of assets from creditors. One of the most commonly protected is real estate, which can be acquired and held in the following structures:
- Individual Name
- Multiple Parties Names: Marriage, Domestic Partnerships, General Partnerships, Joint Ventures
- Entities, including corporations, LLCs and Limited Partnerships
How Does Florida Treat Asset Protection?
Florida has some of the best states for asset protection in the U.S., thanks to its helpful creditor exemption laws.
The law allows unlimited homestead protection and protects tenants by entirety assets, retirement accounts, life insurance, head of household wages, disability insurance and much more.
Federal Bankruptcy Exemptions
Florida residents filing bankruptcy can benefit from broader exemptions as Florida opted out of federal bankruptcy exemptions.
Asset protection in Florida requires the specialist support of a Florida Asset Protection attorney’s specialist support to navigate the Florida exemption law and protect assets from lawsuits and civil judgment creditors.
Who Needs Florida Asset Protection?
In today’s world, anyone who holds assets should consider some type of asset protection.
There are thousands of lawyers who will be waiting to take advantage of debtors, emptying their pockets and wiping out decades of hard work.
If a judgment is entered against you in Florida, a creditor can begin to collect on the judgment very easily.
Permanent Florida residents and anyone who owns property in Florida can benefit from these laws.
In fact, there are cases where people move to Florida to benefit from asset protection laws when they anticipate substantial civil judgments.
What Are Florida’s Asset Protection Laws?
With many assets exempt from lawsuits and civil judgments, Florida asset protection laws are debtor-friendly.
The legal basis for asset protection in Florida is defined in:
- The Florida Constitution: Includes the most fundamental and important protections, including Florida’s homestead protection law.
- Florida Statutes: Enacts many statutes, protecting a large number of assets from creditors.
- Florida Common Law: Established by judges in individual cases, consistent interpretations become part of ‘common law’. Judges respect legal precedent and apply common law.
What Assets Are Protected in Florida?
Many assets are exempt from creditor execution, thanks to Florida statutes. While, common law protects property jointly owned by a married couple, from the creditor of a spouse – in a type of ownership called ‘tenants by entireties.
Limited partnerships and limited liability companies can also be used as asset protection in Florida for businesses or investments.
The key and most commonly protected assets in Florida are:
- The income of someone who qualifies as head of household
- Life insurance
- Retirement accounts such as 401k
- Tenants by the entireties property
- Interest in multi-member LLCs
- Disability income
- Up to $1,000 of vehicle value
- $1,000 of personal property.
- $4,000 of personal property if you don’t own a home.
- Prepaid college plans
- Generic exemptions include:
- Health aids
- Medical savings accounts
- Unemployment benefits
- Social security
- Estate planning trusts can protect beneficiaries’ interests and inheritance rights.
Can I Lose My Home in a Florida Lawsuit?
Florida’s homestead exemption of real property means, in most cases, you cannot lose your house in a Florida lawsuit.
There is no monetary limit on the homestead exemption, but there are some acreage limits.
For example, if your home is within city limits, the law applies up to ½ acre. However, if your home is in the country, the homestead exemption law applies to 160 acres.
Exceptions may be made in scenarios where fraud and misconduct are present.
Business Asset Protection in Florida
To protect assets owned by a business, a separate set of asset protection tools is required.
Structuring business assets and income so that it’s difficult for a creditor to collect can be done with the help of a Florida asset protection attorney’s expert assistance.
What Are Super Creditors?
‘Super Creditors’ such as the IRS, SEC, Department of Justice, FDIC186 and FTC bypass asset protection exemptions by U.S. federal law.
For example, the IRS could collect a property that usually would be protected under Florida state law.
Super Creditors can also collect assets before a judgment is even entered. This provides strong negotiating power for the U.S. government.
IRS Tax Liability
Asset protection in Florida will not protect tax debtors from income tax liability.
Many people think they can move their assets offshore to prevent IRS collection or even from being subject to U.S. income tax. But offshore asset protection planning is not the same as offshore tax planning.
Any tax plans should always be advised and reviewed by a professional, such as our tax planning attorneys.
Is Asset Protection Effective in Divorce Cases?
Asset protection almost always applies to protection against civil creditors.
Asset protection is not usually effective in divorce cases, alimony, property settlements or child support.
Family law judges in divorce cases have powers that civil case judges don’t. They can override asset protection laws.
If a debtor fails to turn over assets in a divorce case or fails to pay child support, then contempt and jail time may be possible.
Does Florida Allow Asset Protection Trusts?
Florida does not currently have a statute for domestic asset protection.
There are techniques to use trusts to protect assets from creditors, but in most cases, there are better alternative asset protection options.
How Long Can a Collection Agency Come After Me?
In Florida, a judgment is valid for 20 years from the moment the judgment is issued.
Don’t worry; you can still utilize asset protection strategies even after the judgment has been issued by talking to our Florida asset protection attorneys.
Common Asset Protection Mistakes in Florida:
Many misunderstandings can lead to costly mistakes, including:
- Not understanding the true purpose of asset protection.
- Assuming it is too late to use asset protection strategies – it is never too late.
- Underestimating creditors and their power.
- Fraudulent transfers.
- Falling for asset protection scams and promoters.
- Thinking asset protection and estate planning are the same things.
- Thinking bankruptcy law is the same as asset protection law.
- Giving up control of your assets.
- Using overly complicated and overpriced asset protection strategies.
Contact an Asset Protection Attorney in Florida
Anyone looking to protect their assets from creditors should contact our Florida asset protection attorneys today. Remember, it’s never too late.
Our attorneys, Howard Ross, Andrew Pardun and Robert Kapusta at Battaglia, Ross, Dicus & McQuaid, P.A. have extensive experience and will review your circumstances and provide advice on which asset protection route is best for you; before helping guide you through the process, in line with the law.
Contact us today to schedule a free consultation.