Florida Residency Requirements for Asset Protection

Florida Residency Requirements

How do you establish residency in Florida? There are no set requirements to become a Florida resident for asset protect purposes. Asset protection is the process of legally structuring one’s assets and income to protect them from judgment creditors. To become a Florida resident for asset protection benefits, a Florida court would consider a variety of factors evidencing your intent to live in Florida. These factors include:

• Formal declaration of residency (Declaration of Domicile).
• Designated mailing address.
• Informal statements regarding residency.
• Place of employment.
• Termination of previous residency in another state or country.
• Registration to vote in Florida.
• A Florida driver’s license.
• Florida tags on all vehicles.
• Using a Florida address on federal income tax forms.

Naturally, the longer your ties to Florida, the stronger your claim to Florida residency. To become a Florida resident and establish your residency here, you must sever ties to the state you moved from. For example, you should sell your current residence outside Florida, turn in your out-of-state driver’s license, and close your bank accounts in the state where you previously resided. It is difficult to claim Florida residency if your license and vehicle registration are elsewhere.

Generally, only Florida residents may take advantage of Florida’s liberal asset protection laws. For instance, in order to protect money in a Florida homestead property or in other assets protected by Florida statutes, one must first establish themselves as a Florida resident.

The term “Florida resident” has different meanings under different parts of Florida law. For asset protection purposes, Florida residency means more than just owning Florida property or having a Florida address. Whether or not you qualify as a permanent Florida resident depends on whether your circumstances and your actions demonstrate your intent to establish a primary place of residence in Florida. When “going home” means you are returning to your residence in Florida and when your personal mail is sent to your Florida address, you are probably a Florida resident.

How Do Courts Decide Residency?

When determining whether someone has established residency in Florida, courts consider all relevant facts and circumstances of a person’s ties to Florida. To decide if a judgment debtor is domiciled in Florida, a court often uses definitions and indications of Florida residence taken from both Florida Statutes and Florida’s administrative code. Florida Statute § 222.17 states that a person can show intent to maintain a Florida residence as a permanent home by filing a sworn Declaration of Domicile with the clerk of the circuit court. The statute does not exclude concurrent ownership of a second residence in another state provided that the primary residence is claimed only in Florida.

Florida Statute § 196.012 defines a permanent residence as “that place where a person has his or her true, fixed, and permanent home and principal establishment to which, whenever absent, he or she has the intention of returning.”

Moving to Florida a Fraudulent Transfer?

A fraudulent transfer is when a judgment debtor transfers an asset in an effort to hinder or delay collection from a current or future creditor.

In general, moving to Florida to take advantage of Florida statutory exemptions and protections from creditors is not a fraudulent transfer. See In re Hill, 163 B.R. 591 (Bankr. N.D. Fla. 1994). However, there is at least one case where the court disallowed Florida exemptions when the person moved to Florida solely to take advantage of exemptions to frustrate creditors in another state.

Waiting Period

There is no waiting period to establish Florida residency for asset protection purposes. As soon as you form the intent to make Florida your primary home, you are a Florida resident, and you are entitled to Florida’s asset protection benefits.

The rules are different for bankruptcy, however. Bankruptcy law imposes a two-year waiting period before a debtor may claim Florida’s exemptions in bankruptcy court.

Residency for Tax Purposes

Becoming a Florida resident means something different in terms of state income tax than it does in terms of Florida asset protection. While there may be certain time requirements related to income taxes imposed by other states (Florida does not have a personal income tax), there is generally no such time requirement for Florida residency for asset protection.

For tax purposes only, you will at minimum need to be living in Florida as a resident for 6 months. Often snowbirds, or people that come to Florida to avoid the cold winters up north, seek to establish residency in Florida to avoid the high income tax rates imposed by those northern states.

Ultimately you should contact a tax professional in the northern state to see what the taxing state’s requirements are in determining whether or not you have become a Florida resident.

For Florida asset protection purposes, what is needed is an intent to make Florida your permanent residence. There is not a strict 6 month time limit.

When Is it Too Late to Move to Florida?

Many people from all over the country who have current or potential legal problems are interested in moving to Florida to take advantage of Florida’s homestead protection and other asset protection laws. It is never too late to move to Florida to obtain protection from civil liability. Debtors  may legally become a Florida resident and protect money invested in a new Florida homestead property even after a money judgment is entered.

There are no civil or criminal penalties for moving to Florida after a creditor files a lawsuit. However, a possible complication exists if another state’s court has issued an injunction against transfer of assets.

Asset Protection Benefits for Florida Residents

Florida residents enjoy some of the best asset protection laws among any state in the country.

Three of the most important types of protected assets in Florida include the homestead exemption, tenants by entireties, and head of household exemption.

The most well known protection is the Florida homestead exemption, which protects a person’s homestead from forced sale by a judgment creditor. The homestead exemption is unlimited without any dollar cap. However, there is an acreage limit: 1/2 acre if the property is inside a city and 160 acres if in an unincorporated part of a county.

Florida also provides an expansive version of tenants by entireties, which can protect personal property owned by a married couple from the debts of one of the spouses. Personal property includes, for example, bank accounts, business interests, furniture, and certain equipment.

Florida law presumes that all personal property acquired by a married couple in Florida is tenants by entireties—in most cases it is up to the creditor to rebut the presumption of entireties ownership.

Finally, Florida statutes exempt the earnings of the head of household, or head of family. Earnings can include wages, salary, commission, or bonus. A head of family is one who provides more than 50% of the financial support for someone they have a moral or legal duty to support (usually an immediate family member).

Last updated on August 13, 2021