Florida Annuity Exemption from Creditors

Annuities in Florida are fully exempt from creditor claims under Section 222.14 of the Florida Statutes. The exemption covers the annuity contract itself, the accumulated cash value, and the proceeds of the annuity after distribution. There is no dollar limit on the exemption. Florida courts have consistently interpreted the annuity exemption broadly, extending protection to the widest range of annuity contracts and arrangements.

The annuity exemption is one of the strongest asset protections available under Florida law because the statute expressly protects annuity “proceeds.” This language means that money withdrawn from an annuity and deposited into a bank account retains its exempt status as long as the funds can be traced to the annuity source. This post-distribution protection distinguishes annuities from IRAs and 401(k) plans, where post-distribution protection is uncertain under Florida case law.

The Statutory Framework

Two Florida statutes work together to protect annuities and life insurance. Section 222.14 exempts the cash surrender value of life insurance policies issued on the lives of Florida citizens or residents and the proceeds of annuity contracts issued to Florida citizens or residents.

A separate statute, Section 222.13, protects life insurance death benefits paid to beneficiaries.

Section 222.14 is the operative statute for annuity protection during the owner’s lifetime. The statute provides that annuity proceeds “shall not in any case be liable to attachment, garnishment or legal process in favor of any creditor” of the annuity beneficiary. The phrase “in any case” reflects the legislature’s intent to create an absolute exemption, and Florida courts have honored that intent through broad interpretation.

The exemption applies to annuity contracts of every variety. Fixed annuities that pay a guaranteed periodic amount, variable annuities invested in securities, immediate annuities purchased with a lump sum in exchange for a current income stream, and deferred annuities that accumulate value over time before distributions begin are all protected. Private annuity contracts between individuals, including family members, also fall within the statutory protection.

Post-Distribution Protection

The annuity exemption extends beyond the annuity contract itself to cover annuity proceeds after they have been paid out. A creditor cannot garnish annuity payments deposited in a bank account if the debtor can trace the funds to the annuity source.

This express protection of “proceeds” is a significant statutory advantage. The retirement account withdrawal exemption under Section 222.21 does not contain equivalent proceeds language, which is why Florida courts have disagreed about whether IRA and 401(k) distributions retain protection after deposit. The annuity statute resolved this question explicitly.

Tracing is still required. A debtor who deposits annuity proceeds into a bank account alongside other income must be able to identify which funds originated from the annuity. Commingling does not automatically destroy the exemption, but it makes the tracing analysis more complex. The statute does not require segregation into a separate account, but maintaining a dedicated account for annuity proceeds simplifies the tracing burden if a creditor serves a writ of garnishment.

The protection may not survive conversion into a fundamentally different asset class. Courts have distinguished between depositing annuity proceeds in a bank account, which preserves the exemption, and using annuity proceeds to purchase real estate or other non-exempt investments, which may terminate the exempt character of the funds.

Owner vs. Beneficiary

Section 222.14 protects the annuity from creditors of “the person who is the beneficiary of such annuity contract.” In most annuity arrangements, the same individual is both the owner and the beneficiary, and the exemption clearly applies. The analysis becomes more complex when the owner and beneficiary are different people.

A debtor who purchases an annuity, names himself as owner and annuitant, but designates a family member as primary beneficiary may face a gap in protection. The statute protects the beneficiary’s interest from the beneficiary’s creditors. It is less clear that the statute protects the owner’s interest from the owner’s creditors when the owner is not the beneficiary.

The owner of an annuity typically retains the right to change the beneficiary, surrender the contract, and receive the cash value. A creditor or bankruptcy trustee could argue that these ownership rights are reachable assets that fall outside the beneficiary-focused exemption. If the annuity contract makes the beneficiary designation irrevocable, neither the owner nor a creditor can change the beneficiary, which eliminates this avenue of attack.

The safest practice is to name yourself as both owner and beneficiary of any annuity purchased for asset protection purposes. This alignment ensures that the statutory language directly protects your interest.

Purchasing an Annuity with Non-Exempt Assets

Converting non-exempt assets into an annuity is a common asset protection strategy in Florida. A debtor who holds cash in a non-exempt bank account can purchase an annuity and immediately gain the statutory protection of Section 222.14. The conversion is legal, but it carries risk if the timing coincides with a creditor threat.

Florida Statute 222.30 prohibits converting non-exempt property into exempt property with the actual intent to hinder, delay, or defraud creditors. A debtor who purchases an annuity as part of a longstanding financial plan, well before any creditor relationship exists, faces no fraudulent conversion risk. A debtor who purchases an annuity with a large lump sum shortly after learning of a potential creditor claim invites scrutiny.

The fraudulent conversion standard under Section 222.30 requires actual intent. Constructive fraud does not apply to conversions into exempt assets. A creditor challenging an annuity purchase must prove that the debtor’s primary purpose was to place assets beyond creditor reach rather than to accomplish a legitimate financial objective such as retirement income planning or tax deferral.

Annuities purchased as part of a broader financial plan that includes retirement income objectives, tax deferral, and estate planning are more defensible than an annuity purchased solely for asset protection with no financial planning rationale.

International Annuities

Additional protection may be available through annuities issued by companies domiciled in foreign jurisdictions. Switzerland and Liechtenstein have laws that specifically protect annuity contracts from creditors located outside those countries, including creditors in the United States.

A Florida resident who owns an annuity issued by a Swiss insurance company receives Florida’s statutory protection under Section 222.14 and may also benefit from Swiss legal protections against foreign creditor claims. A U.S. judgment creditor would need to domesticate the judgment in Switzerland and then overcome Swiss laws that protect insurance and annuity contracts. This dual-jurisdiction protection adds a practical barrier that domestic annuities do not provide.

International annuities involve additional complexity, including tax reporting obligations and regulatory considerations. The exemptions available under Florida domestic law are sufficient for most asset protection objectives, but individuals with significant creditor exposure may benefit from the additional layer that an international annuity provides.