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Asset Protection

Protect your money. Protect your family.
Levin Legal > Asset Protection

Florida has some of the best laws when it comes to protecting your assets...are you taking advantages of these laws and protecting your family's money?

At any moment, you may suddenly face a large debt. Whether you or a loved one suffers an injury, someone sues you or your business, or you lose your job and cannot pay the bills, the last thing you want is for your money to be exposed. If your money is exposed, creditors will likely be able to take it. Florida law is very debtor friendly and, if you prepare yourself properly, your assets will enjoy a “legal shield” that will help protect them from creditors.

There are a multitude of ways to protect your assets, and each person needs their own tailor-made protection plan, but here are some of the top ways to start protecting yourself:

1. Florida Homestead

Florida homestead is Florida’s #1 way to protect your assets. Basically, Florida homestead is a Florida Constitutional protection that allows you to protect your homestead from creditors (there are some exceptions which will be briefly explained below.

First off, you have to qualify for Florida homestead in order to benefit from its protections. In order to qualify, the following criteria must be met:

 

1. You have to actually own the property (meaning, it can’t be a rental);

2. You have to live in the property;

3. You intend for the property to be your primary and permanent residence;

4. The property is located in Florida (Florida homestead will not protect your home in Connecticut); and

5. If the property is located in a municipality (basically a city or town), it must be less than half of an acre.

 

If you meet the above criteria, you may qualify for Florida homestead protection. However, just because you qualify for homestead protection doesn’t mean you’re in the clear. As discussed above, there are a number of the exceptions that may affect your homestead protections. For example, in bankruptcy, if you purchased your property within 1,215 days prior to the bankruptcy, your protection is limited to $125,000 (this, of course, is provided you did not purchase this property with money from a homestead you just sold. If that is the case, you may still be fully protected).

 

For more information about the asset protection benefits of Florida Homestead as well as how to qualify for the protection, call us at (954) 613-0422 and we will be happy to help!

2. Tenants by the Entireties

If you’re married, you can own property jointly with your spouse. This form of ownership is known as tenancy by the entirety. Essentially, if you own property as a tenant by the entirety with your spouse, and only YOU owe a creditor money, that creditor cannot come after the property you own in tenancy by the entirety with your spouse. Florida, unlike many other states, extends tenancy by the entirety protection to personal property in addition to real property (this means it even covers bank accounts!).

Tenancy by the entireties is a great Florida asset protection strategy, however it comes with certain risks. First, if your spouse passes away or you get divorced, you no longer enjoy protection as your tenancy by the entirety ceases to exist.

Further, it may be counter-productive and even risky to own all your assets as tenants by the entirety with your spouse. Fore example, if you own your car as a tenant by the entirety with your spouse and you crash, Florida law (under the dangerous instrumentality doctrine) will allow all the owners of the car to be sued. In such an instant, the creditor (meaning the person who wins the lawsuit against you) will then be able to reach all your assets owned in tenancy by the entirety.

Lastly, tenancy by the entireties ownership may not protect you from debt you owe to the IRS or other debts you owe to the federal government.

 

For more information on the asset protection benefits and pitfalls of a tenancy by the entireties, call us at (954) 613-0422 and we will be happy to help!

3. Limited Liability Companies

Owning a Florida Limited Liability Company is a great way to protect your assets. First, you want to make sure you have a partner as single-member LLC’s no longer offer the protection they used to. A recent Supreme Court of Florida threw a wrench in people’s plans when they ruled in Olmstead v. Federal Trade Commission, 44 So.3d 76 (Fla. 2010) that, if you’re a single member LLC, meaning, you’re the only member of your company, you may be ordered to surrender your LLC’s assets to satisfy judgments against your LLC. However, if you have a partner, you can structure your membership agreement to restrict transfers of LLC assets to the creditors of one of the members.

Additionally, unlike a Corporation, in which your corporate stock is vulnerable…meaning, a creditor can go after the stocks you own, a Florida Limited Liability prevents a creditor from being able to force you to give up your membership interest in your LLC.

 

There are many more asset protection benefits to an LLC. For more information, call us at (954) 613-0422 and we will be happy to help!

4. Head of Household Exemption

A powerful tool creditors possess when they come after your money is a wage garnishment. This allows them to literally take your money as it comes in. However, if you are the “Head of Household,” you may qualify for a protection known as the Head of Household Exemption. This protection may shield you wages, bonuses, and commission from your creditor’s wage garnishment.  There are a number of factors that determine whether you qualify for the Head of Household exemption. For example, you must be providing more than one half of your families financial support.

 

To find out if you qualify for the Florida Head of Household exemption, call us at (954) 613-0422 and we will be happy to help!

5. Estate Planning

If you have assets you intend to leave to your children, you definitely should consider estate planning to properly protect your assets. First off, if any of your children have debt, passing your property to that child allows their creditor to potentially seize the property you just passed to them!

 

Most people don’t want creditors to take property they left for their children. Lucky for you, there are a number of ways to protect the property you would like to pass to a child who has creditors. For example, you can open a testamentary spendthrift trust for the benefit of the next generation. If the trust is properly drafted, creditors will not be able to reach the property within the trust.

 

Additionally, if you don’t have a living will, the property you leave to your children will have to pass through probate. This is an expensive and tedious process which you should try to avoid. There are a number of ways to avoid probate and we recommend speaking with an attorney regarding how you, too, can avoid probate.

 

If you are interested in Estate Planning and want to protect the money you intend to leave for your children, call us at (954) 613-0422 and we will be happy to help!

6. Annuities, Life Insurance, and Other Financial Products

Florida law offers asset protection to a number of financial products. For example, creditors cannot come after the proceeds from annuities (there are a few exceptions if you are in bankruptcy). To most effectively protect annuities, you want to make sure the proceeds are paid into a separate account. This way, it will be clear what assets are actual proceeds from your annuities and creditors will not be able to argue that the money they are trying to take is from other, non-protected assets.

 

Additionally, the cash value from certain life insurance policies enjoys certain protections laid out in Florida Law. Further, if the policy names a beneficiary, that beneficiary can avoid probate when collecting on the policy. Once again, there are a number of exceptions and we strongly suggest consulting with a lawyer before you make certain asset protection decisions.

 

There are many more financial products that offer asset protection. For more information, call us at (954) 613-0422 and we will be happy to help!

7. Offshore Planning

Offshore planning can be expensive and overrated. However, there are a number of circumstances in which offshore planning may be the right choice for you. The details are extensive and we suggest you contact us for more information. A few benefits of Offshore Planning are:

 

1. No requirements to disclose ownership in corporations;

2. Shares could be subscribed to the Bearer or By Name (meaning, if the shares are subscribed to bearer, there is no name on the stock certificate. Rather, whoever holds the certificate owns the stock);

3. No residence requirements for Directors/Officers;

4. Secrecy and Anonymity;

5. Total tax exemption on all and any business activity or transaction carried on outside the jurisdiction;

6. Total business privacy

 

as well as many other benefits.

 

If you are interested in Offshore Planning, contact us at (954) 613-0422 and we will be happy to assist you!

What's Next...

At Levin Legal, we take the time to listen to your needs and create a plan of action tailored to your specific circumstance. If you need legal assistance or advice, call us at (954) 613-0422 and we’ll be happy to assist you.

Do you need legal help or guidance? Contact us now.