Can Stocks Be Garnished in Florida?

Stocks and brokerage accounts are among the easiest assets for a judgment creditor to reach in Florida. Unlike a homestead, retirement account, or annuity, a standard brokerage account has no statutory exemption protecting it from collection. A creditor with a money judgment can file a writ of garnishment directed at the brokerage firm, and within days, every account bearing the debtor’s name can be frozen.

That said, not every investment account is vulnerable. Federal law shields ERISA-qualified plans, Florida statute protects IRAs, and married couples may be able to structure brokerage ownership to create meaningful barriers. Understanding which accounts are exposed and which are protected is essential for anyone holding significant investments in a brokerage account.

How Creditors Garnish a Brokerage Account

The process for garnishing stocks follows the same framework as any writ of garnishment under Chapter 77 of the Florida Statutes. The creditor files a motion for a writ of garnishment identifying the brokerage firm as the garnishee. The clerk issues the writ, and the creditor serves it on the brokerage. No judge’s approval is needed at this stage.

Once the brokerage receives the writ, it must freeze every account where the debtor’s name appears. This freeze is comprehensive. It covers non-retirement accounts, retirement accounts, individual accounts, and joint accounts. The brokerage does not distinguish between exempt and non-exempt funds at the freezing stage. Everything bearing the debtor’s name gets locked.

The creditor then sends the debtor a statutory notice informing the debtor of the right to claim exemptions. If the debtor believes some or all of the frozen accounts are exempt, the debtor must file a Claim of Exemption with the court. The creditor can either accept the exemption and release those funds or contest it, in which case the court will hold an evidentiary hearing to resolve the dispute.

If no valid exemption applies, the court enters a Final Judgment of Garnishment. The brokerage must then liquidate enough of the debtor’s holdings to satisfy the judgment amount and turn over the proceeds to the creditor.

Forced Liquidation and Tax Consequences

One aspect of stock garnishment that catches many debtors off guard is the tax impact. When a brokerage sells securities to satisfy a garnishment, the debtor still owes capital gains taxes on any appreciation in those positions. If the debtor purchased shares years ago at a low cost basis and the creditor forces a sale at current market value, the debtor faces a potentially significant tax bill on gains the debtor never chose to realize.

The creditor receives the gross sale proceeds up to the judgment amount. The debtor receives nothing from the sale but remains liable to the IRS for the capital gains triggered by the forced liquidation. This creates a situation where the debtor effectively loses more than the face value of the judgment. For debtors holding large unrealized gains, this tax exposure can meaningfully compound the financial damage of a garnishment.

Retirement Accounts Are Protected

Not every account at a brokerage is vulnerable. Retirement accounts receive strong protection under both federal and Florida law.

ERISA-qualified plans enjoy the broadest shield. The Employee Retirement Income Security Act preempts state law and makes employer-sponsored plans such as 401(k) accounts, 403(b) plans, and defined benefit pension plans exempt from creditor garnishment. This protection applies regardless of which state the debtor lives in or where the plan is administered. A brokerage account that holds assets under a 401(k) plan cannot be garnished even though it sits at the same firm as the debtor’s taxable account.

Florida Statute § 222.21 extends similar protection to non-ERISA retirement accounts. Traditional IRAs, Roth IRAs, inherited IRAs, SEP IRAs, and SIMPLE IRAs are all exempt from garnishment in Florida. Self-directed IRA accounts also qualify for protection, provided they comply with the structural requirements of § 222.21. This means a debtor who holds publicly traded stocks inside an IRA at the same brokerage where they hold a taxable account will see the IRA frozen initially but can claim an exemption to release those funds.

The critical distinction is the account type, not the underlying investments. A debtor who owns shares of the same company in both a taxable brokerage account and an IRA will find that the taxable shares are exposed to garnishment while the IRA shares are protected.

Tenants by Entireties Protection for Married Couples

Florida law allows married couples to own personal property, including brokerage accounts, as tenants by the entireties. An account held in this form is fully exempt from a judgment against only one spouse. Because each spouse is treated as owning an undivided 100% interest in the account, a creditor of one spouse alone cannot sever or reach the entireties property.

This protection is powerful but requires careful setup. Not every brokerage offers tenants by entireties as an ownership option, and those that do may only provide the necessary form upon specific request. A married couple that opens a joint account and selects “Joint Tenants with Right of Survivorship” has explicitly disclaimed entireties ownership, and the account will be exposed to garnishment from a creditor of either spouse.

Online brokerages present an additional complication. The legal situs of a brokerage account is generally the branch or office where the account is maintained. If an online brokerage is domiciled in a state that does not recognize tenants by entireties for personal property, the protection may not apply even though the account holders are Florida residents. Married couples relying on this protection should confirm that the brokerage recognizes entireties ownership and that the account documentation reflects it.

The protection disappears in several situations. If both spouses are jointly liable on the debt, a joint creditor can reach entireties property. The protection also ends immediately upon divorce or the death of one spouse. Federal “super creditors” such as the IRS, SEC, and FTC can reach entireties property even when the debt belongs to only one spouse.

Restricted Stock, RSUs, and Stock Options

Employee equity compensation adds another layer of complexity. Restricted stock, restricted stock units, and stock options each present different questions for creditors attempting to garnish.

Restricted stock is not an exempt asset under Florida law. However, the restrictions on the stock limit what a creditor can do with it. A creditor acquires only the same rights as the debtor, meaning if the debtor cannot transfer or sell the shares until a vesting date, the creditor faces the same limitation. In practice, many creditors will levy on restricted stock not to sell it immediately but to prevent the debtor from accessing its value. Once the restrictions lapse, the creditor’s position strengthens considerably.

RSU agreements often contain anti-alienation language providing that the units cannot be transferred to creditors or subjected to garnishment. Some agreements go further and state that any attempt to garnish RSUs will cause them to terminate and become void. Whether these contractual provisions actually prevent a creditor from reaching vested RSUs through a court order is an unsettled question, and the answer may depend on the specific plan language and the court’s willingness to enforce those restrictions against third-party creditors.

Vested stock options that the debtor has the right to exercise are generally reachable. The creditor can obtain a turnover order requiring the debtor to exercise the options and deliver the resulting shares. Unvested options present a more difficult target because the debtor does not yet have the right to exercise them, and the creditor’s rights cannot exceed the debtor’s own rights in the asset.

Protecting Stocks from Garnishment in Florida

Florida law offers several legitimate strategies for shielding investment assets from potential creditor claims, though each has limitations.

For married couples, establishing a properly documented tenants by entireties brokerage account is the most straightforward domestic approach. Both spouses must open the account together, and the account documentation must reflect entireties ownership. Simply adding a spouse’s name to an existing individual account may not satisfy the unity of time and title requirements necessary to create a valid entireties estate.

Holding investments inside exempt account types provides the strongest statutory protection. Maximizing contributions to ERISA-qualified employer plans, IRAs, and other accounts protected under § 222.21 places those assets beyond the reach of most creditors. Florida Statute § 222.14 also exempts annuities and annuity proceeds from creditor claims. Variable annuities can hold equity-like investments, including stock index funds, while enjoying the same blanket exemption as fixed annuities. This makes annuities a potential planning tool for investors who want market exposure without garnishment risk.

Irrevocable trusts funded before any liability arises can also insulate investment portfolios. A properly structured irrevocable trust removes the assets from the debtor’s estate entirely, making them inaccessible to the debtor’s creditors. The trust must be funded before any claim or reasonably anticipated claim exists to avoid fraudulent transfer challenges.

For individuals with substantial non-exempt investment portfolios who face significant litigation exposure, an offshore trust provides a layer of protection that domestic strategies cannot match. A Cook Islands trust, for example, requires a creditor to re-litigate the underlying claim in the Cook Islands under standards heavily favorable to the debtor.

Pre-Judgment Garnishment of Brokerage Accounts

Florida law does allow a creditor to garnish a brokerage account before a final judgment is entered, but the practical barriers are significant. Under § 77.031, a creditor seeking a pre-judgment garnishment must post a bond equal to double the amount of the claimed debt. The bond exists to protect the debtor against potential damages, legal expenses, and costs if the creditor does not ultimately prevail in the lawsuit.

The double-bond requirement means pre-judgment garnishment of brokerage accounts is rare. A creditor pursuing a $500,000 claim would need to post a $1,000,000 bond before the court will issue a pre-judgment writ. Very few creditors are willing or able to commit that kind of capital to a collection action before they have even won the case. As a practical matter, debtors face the greatest garnishment risk after a judgment is entered.

Responding to a Brokerage Account Garnishment

If a brokerage account is garnished, the debtor should act immediately. The first step is identifying which accounts and funds are exempt. Retirement accounts, entireties accounts, and funds traceable to exempt sources such as Social Security deposits or head of household wages may all qualify for release through a Claim of Exemption.

The debtor must file the Claim of Exemption promptly. Delays can result in the creditor obtaining a default Final Judgment of Garnishment, at which point the funds will be turned over regardless of whether an exemption would have applied. The garnishment process also requires strict compliance with procedural rules by the creditor, and writs that fail to follow the statutory requirements of Chapter 77 can be challenged and dissolved.