Not all annuities owned by Florida residents are protected from their creditors. Protection does not depend upon the type of annuity or the issuer of the annuity, but asset protection does depend upon the state where the annuity was issued to the debtor. People who purchased annuities in another state before moving to Florida may not be eligible for Florida’s annuity exemption. Start with the general principal that Florida residents cannot export Florida’s exemptions to another state so that your assets located or sited in a foreign state may not be protected by Florida laws. Annuities are contracts between you and an insurance company providing for financial benefits.
Most annuity contracts state that the contract is to be interpreted under the laws of the state where the annuity was issued or where the owner signed the contract. If you resided in Florida when you bought an annuity your annuity was issued in Florida and governed under Florida asset protection law regardless of whether the insurance company has offices in Florida. But, if you lived in another state when you bought your annuity the annuity contract is probably located in the other state and not Florida.
If the state, other than Florida, where you purchased the annuity also exempts all annuities from creditors then you are protected under the laws of the other state. If the other state’s laws do not exempt annuities then I do not think your moving to Florida with your annuity in hand is sufficient to bring the annuity under Florida’s annuity protection. There are cases which have held, for example, that a person who opened a bank account or an IRA account in another state before moving to Florida cannot claim Florida’s exemptions for those assets.
Understand that it does not matter where the insurance company is located; the issue is where you were located when you purchased the annuity. If you purchased your annuity in another state which does not provide annuity exemption there are several things you can try to protect the asset. I cannot explain all options in a brief blog post. One example is to ask the insurance company to reissue the same annuity in Florida, and another option is to see if the annuity contract itself contains asset protection provisions.
Update 2021: Note that the above post is originally from 2011 and laws may have changed in the meantime.
About the Author
Jon Alper is an expert in asset protection planning for individuals and small businesses.
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