I’ve seen recently several clients who are interested in moving to Florida from community property states including California and Arizona. I recently published a post about the status of a non-debtor spouse’s LLC interest that the couple acquired in Texas before moving to Florida. Other clients have asked about other types of community property assets such as joint marital bank accounts, retirement accounts, and wages from employment in their community property state. Their moves to Florida presented issues about the protection of their assets that arrive in Florida from a community property state.
The general rule is that marital property acquired in a community property state retains its community property characteristics after it is imported to Florida. If the same assets are used to purchase, or are otherwise converted, into a different asset in Florida the new asset would have its property characteristics of Florida laws.
I believe that if the couple opens a new tenant by entireties bank account in Florida and deposits in the new account their money held in the community property bank that the funds would be tenants by entireties property. The transfer of money to a new Florida account would be a conversion of funds to a new form of property.
I do not know of a state that does not exempt IRA and other retirement funds. Some states, however, have dollar amount ceilings on their exemption whereas Florida’s retirement exemption is unlimited. Also, Florida case law exempts withdrawn retirement proceeds held in a checking or other financial account. Retirement funds held in an account opened in a community property state would probably fall under the laws of the community property state where the account was opened. Moving retirement money to a new account opened in Florida would cause the money to be exempt under Florida’s laws.
If a debtor after moving to Florida continues employment with an employer located in a former community property domicile, I think that a creditor could garnish wages through a court in the community property state. Garnishment actions occur in the state where the employer is located or where the employer has offices. A Florida resident cannot assert head of household garnishment exemption in a court located outside of Florida. Only if the debtor worked for a national company with offices in Florida would the new Florida resident have an argument to exempt wages from garnishment.
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