I’ve warned many times on this Blog that a court’s asset freeze can stop asset protection planning in its tracks. As a result, speed is essential when trouble first appears on the distant horizon. For instance, a debtor had his financial adviser call me several weeks ago from New Jersey to discuss asset protection options including buying a Florida homestead. There was a potential civil lawsuit in sight, but no lawsuit was anticipated in the near future. During the next three months the adviser called several times to schedule and reschedule consultations, each time asking a few preliminary questions about moving to Florida. Neither the client nor the adviser ever scheduled a consultation nor took any action on their own toward moving from New Jersey.
This week the same adviser called again and said that while the client’s civil suit was the main issue, the client was also going through a divorce and the divorce court just issued an order prohibiting the sale or transfer of any of the client’s assets. The adviser asked if it was still possible for the client to sell the New Jersey home and buy a primary residence in Florida to protect the client from the potential civil suit. Its too late.
The general rule is that a debtor can protect money invested in a Florida homestead at any time, even after a suit is filed or a judgment is recorded. However, one cannot transfer money to a Florida homestead in violation of a court order or general asset freeze. In this case, the sale of the New Jersey residence and move to Florida would subject the debtor to sanctions for contempt of court. No attorney is going to assist with this course of action.
Moving to Florida for asset protection purposes is a life changing decision which requires careful thought. Yet, some debtors do not have time for deliberation and analysis. In this instance, a person facing multiple legal problems delayed action several months until, in the end, his assets will be devoured by a former spouse and possible civil creditors as well.