Two people asked me similar questions today about “wage accounts.” The first question was whether you have to have a separate account titled “wage account” to have your salary or commissions protected after they are deposited in a bank account. The answer is no. However, whatever the account is titled it makes the wages easier to defend if only wages are deposited. You could deposit wages in a tenancy by entireties account and still qualify for the protection. The statute that protects wages of the head of household does not require segregating the wages in a distinct account.
A second question was whether there is a monetary limit on the amount of money that remains protected in a wage account for a period of six months. The answer is no. The wage protection statute does not impose a maximum amount of protected wages for people who are head of household.
An interesting question is whether the head of household can transfer money from his wage account to another checking account. Probably no, as long as the other account is also protected from creditors. Suppose a single debtor who supported, for example, a minor child or parent, had a “wage account” and a second account in his own name. If money was transferred from the wage account to the second account a creditor could try to garnish the second account. The debtor would have to argue that both accounts hold only wages. The statute does not limit debtors to a single “wage account.” If the same debtor were married, and the debtor transferred wages to a tenancy by entireties account, the transferred wages would be easier to defend. I believe a creditor could still argue that the transfer of money to the joint account was a fraudulent conveyance to the spouse in order to protect the money beyond the six month period provided by the wage protection statute. I do not know of a case on that issue.
About the Author
Jon Alper is an expert in asset protection planning for individuals and small businesses.
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