Timing Annuity and Homestead Purchase Before Moving to Florida

An individual currently resides in a state outside of Florida where he is facing a potential large lawsuit from a business transaction. The individual is considering moving to Florida, purchasing a Florida homestead, and investing cash in annuities which are protected from creditors by Florida statutes. His current state of residence does not afford sufficient protection of either homesteads or annuities. The question posed is the timing of purchasing the annuity and the homestead relative to the time of his move to Florida

The answers depend in large part upon the vulnerability of his purchase of a homestead and an annuity to a creditor’s fraudulent conveyance attacks. Under Florida law homestead is not subject to fraudulent conveyance attack with narrow exceptions. The purchase of an annuity with non-exempt money may be set aside as a fraudulent transfer or conversion under applicable Florida statutes.

I suggested to this individual that he could wait to purchase the homestead until after he made a final decision to move to Florida, even if the move is not made until the time of a judgment. I suggested that he should purchase annuities now if annuities fit with his personal financial planning. Because the annuities are not exempt assets in his current State residence, the annuity purchase should not be considered a fraudulent conversion because it is not a conveyance of money to an exempt asset.

Fraudulent conveyance actions are based on the debtor’s intent at the time of the conveyance. At this time, purchasing an annuity does not protect the individual’s assets, and therefore, his intent logically is not to hinder or delay future creditors. Nevertheless, if the individual were to become a Florida resident in the future Florida’s laws would apply to debt collection, so that his previously purchased annuities should be protected. There is no court case that holds that someone’s moving to Florida could be considered a “fraudulent move” subjecting the person’s assets to creditor attack.

Last updated on May 22, 2020

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