Florida law allows you to protect unexempt assets at any time by purchasing a Florida homestead. A key feature of Florida homestead law is the homestead’s exemption from fraudulent conversion claims brought under Florida’s fraudulent conversion statute. Even after a lawsuit has been filed, you can invest unlimited amounts of money in large estate homes and farms and protect the full value of these luxury residences under Florida’s homestead law.
According to a key Florida Supreme Court ruling, you can convert unprotected, non-exempt assets to your homestead at any time by either buying a new home, improving the home, or reducing the principal balance of an existing mortgage. You can always protect their money under the homestead umbrella, even if the asset transfer was designed to protect the money from existing creditors.
Money Obtained by Fraud
A Florida homestead is not protected if the money used to purchase the home was obtained by deceit, fraud, or other egregious means. Your judgment creditor may impose and foreclose an equitable lien on a Florida homestead if the creditor can prove that you obtained money fraudulently or in breach of fiduciary duty and then invested the same funds in a homestead property.
Florida Homestead Protection in Bankruptcy
Florida homestead protection may not apply if you file bankruptcy. Under bankruptcy law, homestead protection is capped by federal exemption limits unless the bankruptcy debtor occupied their current Florida homestead property, plus any previous Florida homestead properties, for a continuous 40-month period prior to the bankruptcy filing.
These exemption limits increase occasionally, so you should get the current limits from your bankruptcy attorney. Also, a bankruptcy trustee may challenge as a fraudulent conversion your transfers of cash into your homestead within ten years of filing bankruptcy if the transfer was intended to defraud creditors.
This bankruptcy law does not affect Florida’s unlimited homestead exemption in state court proceedings, including state court allegations of fraudulent conversion into a homestead.