Florida law exempts many assets from execution by a judgment creditor including intangible personal property including life insurance and annuities. Section 222.14 of the Florida statutes exempts cash value life insurance, annuities and annuity proceeds that were issued to citizens or residents of Florida. Most other states do not exempt these assets from creditor garnishment.
Suppose an annuity or life insurance policy is issued to a debtor in a state that does not exempt annuities or life insurance, a judgment is entered against the debtor in the non-exempting state, and then the debtor moves to Florida- is the annuity or life insurance exempt under Florida law, or is the annuity or life insurance not exempt because the debtor was not a Florida resident or citizen when the debtor acquired the assets.? The same issue may pertain to other financial assets such as retirement accounts- stated more generally, are asset exemption based upon the law of the state where the asset was acquired or the state where the debtor resides at the time of creditor collection?
The Florida Supreme Court considered this issue in a case a long time ago. The Court noted that a strict reading of the statute does not exempt annuities or life insurance that where issued to a non-resident. However, the court also stated that the public policy behind the state was to provide financial support of the families of Florida residents and citizens subjected to a civil judgment. On balance, the Court said that annuities and life insurance are protected from creditors regardless of where the debtor lived when he acquired the asset. The determining factor on the statutory exemption is the domicile of the debtor at the time creditor asserts a claim to the asset in Florida.
This situation can be more uncertain when a creditor is “chasing” the debtor to Florida. Suppose a debtor rents an apartment in Florida and applies for a Florida drivers license, voting card, and mail transfer. However, not all of these processes are completed when the creditor applies to garnish the annuity or life insurance in a Florida court. Each day that the debtor is in Florida his claim to Florida citizenship is stronger. Suppose too that as soon as the garnishment writ is issued the debtor files with the court a claim of exemption, but the court hearing on the exemption claim is scheduled weeks, or months, in the future. By time of the hearing, the debtor has acquired most indices of Florida domicile and is then entitled to Florida asset exemptions.
The creditor argues that the debtor’s residency should be evaluated at the beginning the garnishment process and at that time the debtor was not sufficiently rooted in Florida to qualify as a Florida resident; the debtor contends residency should be evaluated at the time of the exemption hearing- i.e., at the end of the garnishment and exemption process. The Florida Supreme Court has held that a debtor’s residency and his qualification for Florida asset exemptions is determined based on facts when the creditor initiates an attempt to subject the asset to legal process. In the case of a garnishment, the debtor’s residency and exemptions would be determined as of the date a creditor requested a writ of garnishment be issued by the clerk of court. The Supreme Court pointed out that the State of Florida’ interest in the debtor’s asset arises when an attempt is made in Florida to garnish the asset.
The above guidelines apply to Florida courts. If a creditor has a judgment from a foreign court against a person who has since moved to Florida the creditor may assert legal process against the debtor’s assets in the foreign court that issued the judgment notwithstanding that the debtor moved from the foreign state to Florida. Debtor’s may not export Florida exemptions to another state. Therefore, the debtor’s Florida asset exemptions cannot defeat a garnishment writ issued by a foreign court regardless of the debtor’s Florida residency.