In Florida, asset protection is the designation of a legal process where a debtor structures its assets in such a manner to make it hard for either a current or future creditor to seize any of those assets.
To develop a customized plan of asset protection in Florida, it is crucial to work with an expert attorney to tailor strategies to avoid or defend against any liabilities that may permit a creditor to collect from your estate.
In this article, you will find out feasible ways to protect your assets as provided by Florida law.
Asset Protection Laws in Florida – Explaining the Legal Basis of Asset Protection
In the United States, even though all fifty states have laws that exempt certain assets from creditors, there are specific laws that vary from state to state that determine the level of asset protection granted to debtors.
In this sense, Florida can be considered a debtor-friendly state, especially considering the wide array of assets exempt from lawsuits and judgments under state law. Three legal sources provide the unwavering level of asset protection enjoyed by Florida residents – the Florida Constitution, Florida statutes, and Florida common law.
Firstly, the Florida Constitutional provides the fundamental asset protection laws, which include homestead protection. Following the state’s Constitution, the Florida Statutes encompasses a set of statutes that provide ground for asset protection.
Accordingly, the Statutes grant Florida residents a wide array of asset protection tools against creditors, but it also provides creditors with legal tools to collect what is owed to them.
Also, courts have the power to judge cases through their interpretation of the state Constitution and Statutes. Hence, consistent interpretations become part of the state’s common law, as judges must respect legal precedent to decide the fate of a case.
Asset Protection Laws in Florida – What Are the Assets Protected by Florida Law?
Fortunately, Florida’s asset protection laws apply both to permanent residents in the state and individuals who reside in other states but own property in Florida.
It is not uncanny to see individuals anticipating asset liabilities in the future who move to Florida as a way to protect their real property and other assets. The list of key assets protected by Florida law includes:
- Homestead property
- Life insurance
- Retirement accounts
- Property owned under tenancy by the entirety (if the judgment is separate)
- Wages of individuals considered as “head of household”
- Disability income (e.g., disability insurance)
- Prepaid college plans
- Social security
Besides, there are several generic exemptions, including health aids, medical savings accounts, unemployment benefits, etc.
The state of Florida also offers asset protection for $1,000 of value in a vehicle, as well as $1,000 of the value of personal property ($4,000 for individuals who do not own a home).
Asset Protection Laws in Florida – Business Assets vs Personal Assets
It is crucial noting that protecting assets belonging to a business requires a different approach than protecting individual assets.
Commonly, business asset protection requires a strategic business structuring to make it more difficult for creditors to collect any assets with monetary judgments or lawsuits.
In this context, many people use limited partnerships and limited liability companies (LLCs) to protect both business and personal assets, depending on each specific asset protection strategy.
Florida law grants protection for interest in a multi-member LLC, as long as there is a properly-written operating agreement in place. However, even the interest in a multi-member LLC is still exposed to charging liens.
Are Trusts Reliable Tools in Terms of Asset Protection?
Indeed, Florida law grants protection to assets held in well-structured trusts. This way, the trust maker can protect his/her beneficiaries’ interests and inheritance from creditors.
There are two main types of trusts used for asset protection in Florida – irrevocable trusts and revocable trusts.
Generally, irrevocable trusts are a suitable choice for long-term financial strategies (e.g., individuals looking to minimize the tax burden upon their death). Meanwhile, revocable trusts are a good option for people who want to remain in control of their assets until their death.
Ultimately, it is crucial to seek guidance from an expert attorney if you want to utilize trusts as an asset protection tool.
We Can Help You to Protect Your Assets in Florida Today
The state of Florida offers valuable legal tools for those interested in protecting either personal or business assets. However, it is crucial to work with an expert attorney to tailor the ideal asset protection strategy.