A reader asked about the protection of annuity proceeds. Florida statutes protects both annuities and the proceeds of an annuity. The reader said he deposited annuity proceeds in a normal checking account and then moved the money to a separate money market account. The funds in both accounts, he said, are traceable to the annuity
I do not know of any cases which discussed how far courts extend protection to annuity proceeds. I think the traceable annuity withdrawals are protected in the checking account. Theoretically, the proceeds should be protected in a money market account. At some point, these proceeds would become vulnerable and difficult to trace. My advice to debtors relying on the annuity exemption is to keep it simple. Put annuity proceeds in a segregated bank account and either keep them there or transfer the proceeds to another protected asset such as a tenancy by entireties account or homestead.