FLORIDA ASSET PROTECTION - Statutory Exemptions
Much of the asset
protection benefits for Florida residents is contained within
the Florida Statutes. These exemptions are available only to people
who permanently reside in Florida.
Salary
or Wages
Wages, earnings or
compensation of the head of household which are due for personal
labor or services, including wages deposited into a bank account
(provided they are traceable and identified as such) are exempt
from garnishment under Section 222.11 of the Florida Statutes.
A debtor is head of household if he financially supports someone for whom he has a legal or moral support obligation, such as a spouse, child, or parent. The dependant does not have to reside in the debtor's primary residence. When a husband and wife have a joint judgment debtor only one of the spouses can be head of household.
Life
Insurance Policies and Annuity Contracts
Cash value in insurance
and all annuities are protected from creditors' claims by Florida
Statutes. While a Florida resident is alive, the cash value
of any insurance policy he owns on his life or on other Florida
residents is exempt from creditors claims. The protection afforded
to the cash surrender value of a life insurance policy is only
for the benefit of the owner/insured. Death benefits are not
protected from the creditors of the policy beneficiary.
Perhaps the most popular financial
product for asset protection planning is annuities. Florida
courts have liberally construed this statutory exemption to
include the broadest range of annuity contracts and arrangements.
Private annuities between family members are entitled to the
exemption as are the proceeds of personal injury settlements
structured as an annuity. Additional protection is available
by purchasing international annuities. Particularly, Switzerland
and Liechtenstein have laws which guard annuities from attack
by creditors for outside countries including the United States
The protection of
cash value insurance and annuities extends to proceeds of these assets after receipt. Florida courts have held that funds withdrawn
from a cash value insurance policy and annuity payments received
by a debtor remain protected after they are deposited in a financial account as long as the funds can be accurately
traced back to the exempt assets. The money does not have to be segretated in a separate account so long as it is traceable.
Pension
and Profit Sharing Plans, IRAs
To prepare for retirement
and to defer income taxation more and more individuals direct
significant wealth into IRA accounts and other tax qualified
retirement plans. In Florida, retirement money not only defers
income taxation, but is protected from creditors as well. Florida
Statute 222.21(2)(a) provides that any money or other assets
payable to participant or beneficiary in a qualified retirement
or profit sharing plan is exempt from all claims from creditors
of the beneficiary or participant. Florida Statutes specifically
include under the protection umbrella pension plans designated
for teachers, county officers and employees, state officers
and employees, police officers, and firefighters. The debtor's IRAs are exempt from creditors, but one Florida court has held that inherited IRAs are not exempt from creditors.
Disability
Income
Disability income
benefits under any disability insurance policy are exempt from
legal process in Florida.
Automobile
Exemption
Florida residents
may protect up to $1,000 of equity in an automobile. The
fact that a debtor need his automobile to go to work does not
protect the vehicle from creditors to the extent that the debtor's
equity (value less loan amount) exceeds $1,000.
Prepaid
College Plans
Florida prepaid college
tuition plans and Florida's 529 college saving plan are protected
from creditors by Florida Statute 222.22.
Miscellaneous
Exemptions
Florida Statutes include
several narrow asset exemptions such as professionallly prescribed
health aids, qualified prepaid college tuition, hurricane savings
accounts, medical savings accounts, and unemployment benefits. A debtor's bank account held in trust for a minor child is also protected from the debtor's creditors.
