Can Stocks Be Garnished in Florida?

Stocks and brokerage accounts are among the easiest assets for a judgment creditor to reach in Florida. A standard taxable brokerage account has no meaningful exemption protecting it from collection, unlike a homestead, retirement account, or annuity. A creditor with a money judgment can file a writ of garnishment directed at the brokerage firm, and within days every account bearing the debtor’s name can be frozen.

Federal law shields ERISA-qualified plans, a Florida statute protects IRAs, and married couples may be able to hold brokerage accounts as tenants by the entireties to block individual creditors. Beyond Florida’s $1,000 personal property exemption, and the $4,000 available to a debtor who claims no homestead, a taxable brokerage account is fully exposed.

How Creditors Garnish a Brokerage Account

Shares held in a brokerage account are reached the same way bank accounts are, through a Chapter 77 writ of garnishment served on the brokerage. Section 678.1121(3) makes that the exclusive route. The creditor files a motion identifying the brokerage firm as the garnishee. The clerk issues the writ, and the creditor serves it on the brokerage. No judge’s approval is needed at this stage.

Once the brokerage receives the writ, it must retain the debtor’s property and report every account bearing the debtor’s name: non-retirement and retirement, individual and joint. The brokerage does not sort exempt from non-exempt funds at that stage. A garnishee in doubt may hold the property without liability. Section 77.19 caps what the brokerage may hold back at double the amount the writ states the creditor expects to recover.

The creditor then sends the debtor a statutory notice of the right to claim exemptions. If the debtor believes some or all of the frozen accounts are exempt, the debtor must file a Claim of Exemption with the court. The creditor can either accept the exemption and release those funds or contest it, in which case the court holds an evidentiary hearing.

If no valid exemption applies, the court enters a Final Judgment of Garnishment fixing what the brokerage owes. Because securities are not cash, the creditor usually needs a further order, either under that same securities statute or in proceedings supplementary, directing the brokerage to sell enough of the holdings and turn over the proceeds.

Shares held outside a brokerage account are reached a different way. A paper stock certificate must be physically seized by the officer making the levy, and shares registered directly with the company’s transfer agent are reached by legal process served on the issuer. Serving a writ on a brokerage does not touch either one.

Forced Liquidation and Tax Consequences

Garnishment of a brokerage account triggers capital gains taxes that the creditor does not pay and the debtor never chose to realize. A debtor who purchased shares years ago at a low cost basis and faces a forced sale at current market value gets a tax bill on top of the judgment loss.

The creditor receives the gross sale proceeds up to the judgment amount. The debtor receives nothing from the sale but remains liable to the IRS for the capital gains triggered by the forced liquidation.

Do Margin Loans Protect Stocks from Garnishment?

A margin loan does not shield a brokerage account from garnishment. When the creditor serves a writ of garnishment on the brokerage, the broker discloses both the securities and the margin lien. A court can order the brokerage to liquidate the account, pay off the margin loan first, and turn over the net equity to the creditor. The lien reduces what the creditor collects, but it does not keep the creditor out of the account.

Retirement Accounts Are Protected

Federal law bars garnishment of benefits under an employer pension plan, which covers 401(k) accounts and defined benefit pensions. ERISA’s anti-alienation rule, 29 U.S.C. § 1056(d)(1), requires every pension plan to provide that benefits cannot be assigned or alienated. A brokerage account holding assets under a 401(k) plan cannot be garnished even though it sits at the same firm as the debtor’s taxable account. Some plans fall outside ERISA entirely: public school and church 403(b) plans, and solo 401(k) plans with no employees other than the owner.

Florida Statute § 222.21 extends similar protection to non-ERISA retirement accounts. Traditional IRAs, Roth IRAs, inherited IRAs, SEP IRAs, and SIMPLE IRAs are all exempt from garnishment in Florida. Self-directed IRA accounts also qualify, provided they comply with the structural requirements of § 222.21. The exemption does not apply to two claimants: an alternate payee under a qualified domestic relations order, and a surviving spouse enforcing an elective share.

A debtor who holds publicly traded stocks inside an IRA at the same brokerage where they hold a taxable account will see the IRA frozen initially but can claim an exemption to release those funds.

Can Tenancy by the Entireties Protect a Brokerage Account?

A brokerage account that a married couple holds as tenants by the entireties is fully exempt from a judgment against only one spouse. Florida law allows married couples to own brokerage accounts in that form. Because each spouse is treated as owning an undivided 100% interest, a creditor of one spouse alone cannot sever or reach the entireties property.

Most major brokerages offer tenants by entireties, though some list it only on a paper form or on request, and a few do not offer it at all. A married couple that opens a joint account on a form offering entireties and selects “Joint Tenants with Right of Survivorship” instead has disclaimed it, and the account is exposed to garnishment. A survivorship designation on a form that never offered entireties is not by itself a disclaimer, and the account can still carry the entireties presumption, leaving the creditor to prove otherwise.

The law that governs a securities account is fixed by the account agreement first. Under § 678.1101, the agreement’s own designation of governing law controls, followed by the office the agreement names as maintaining the account. The place where the brokerage keeps its headquarters sits at the bottom of that list. Married couples relying on entireties protection should confirm that the brokerage recognizes the ownership form, that the application or agreement records it, and that the brokerage’s own governing-law terms do not cut against it.

Entireties protection disappears in several situations. If both spouses are jointly liable on the debt, a joint creditor can reach the account. Divorce ends the protection. The account becomes a tenancy in common, and the debtor’s half is exposed. The IRS can reach entireties property even when the tax debt belongs to only one spouse.

Death ends the entireties ownership too, but the order decides the result. If the debtor spouse dies first, the account passes to the surviving spouse and the individual creditor loses its target. If the non-debtor spouse dies first, the debtor owns the whole account and the creditor can reach all of it.

Restricted Stock, RSUs, and Stock Options

A creditor takes no more than the debtor holds, so vesting schedules and plan terms decide what a creditor can reach in restricted stock, restricted stock units, and stock options.

Restricted stock is not an exempt asset under Florida law. However, vesting restrictions limit what a creditor can do with it. If the debtor cannot transfer or sell the shares until a vesting date, the creditor faces the same limitation. Many creditors levy on restricted stock not to sell it immediately but to lock down the value so the debtor cannot access it once the restrictions lapse.

RSU agreements often contain anti-alienation language providing that the units cannot be transferred to creditors or subjected to garnishment. Some agreements state that any attempt to garnish RSUs will cause them to terminate. Florida exemptions come from the constitution and the statutes, not from a plan document. No statute exempts restricted stock or restricted stock units, and no Florida court has held that anti-assignment language in an equity plan blocks a judgment creditor. A creditor still takes the units subject to the plan’s vesting and forfeiture terms.

A creditor can pursue vested options in proceedings supplementary under Section 56.29, where the court can order the debtor’s non-exempt property applied to the judgment. Collection is awkward in practice. Exercising an option costs money, and most plans bar transferring the option itself. Unvested options present a harder target because the debtor does not yet have the right to exercise them.

Protecting Stocks from Garnishment in Florida

A tenants by entireties brokerage account has to be titled that way from the day it is opened. Adding a spouse’s name to an existing individual account does not create a tenancy by the entireties. The two interests must begin at the same time and in the same instrument, and Florida’s bank-account statute that forgives those unities for deposit accounts does not reach a securities account. The fix is a new account titled as tenants by entireties, with the assets moved into it.

Florida Statute § 222.14 also exempts annuities and annuity proceeds from creditor claims. The exemption reaches variable annuities holding stock index funds. Converting a taxable brokerage account into an annuity keeps the money invested and out of a creditor’s reach. Under Section 222.30, a creditor has four years to challenge the conversion if the purchase was made with actual intent to hinder, delay, or defraud. A purchase made as part of an existing retirement or income plan is more defensible than one made after a claim surfaces.

Florida Statute § 222.22 exempts prepaid college tuition plans and 529 college savings plans from creditor process. The amounts held in them, though, are typically modest relative to a high-net-worth investor’s total portfolio.

An irrevocable trust can insulate an investment portfolio, but only when the person who funds it, the settlor, is not a beneficiary. Under § 736.0505(1)(b), a creditor of the settlor can reach whatever the trustee could distribute back to the settlor, and whatever the trustee could spend for the settlor’s benefit counts the same. A trust that keeps the settlor as a beneficiary therefore protects nothing in Florida.

A trust funded for a spouse, children, or other third parties sits outside the settlor’s creditors’ reach. Funding it before a claim or a reasonably anticipated claim exists also keeps the transfer clear of a fraudulent transfer challenge.

For individuals with substantial non-exempt investment portfolios, an offshore trust provides protection that domestic strategies cannot match. A Cook Islands trust requires a creditor to re-litigate the underlying claim in the Cook Islands under standards that make collection impractical. Setup costs run about $21,000 trust-only, with annual trustee fees of about $5,000. Adding the offshore LLC most structures use brings those figures to about $26,000 and about $6,000.

Those costs are proportionate for someone with more than $1 million in total assets or more than $500,000 in liquid, non-exempt assets. A seven-figure taxable brokerage account clears the second measure on its own.

Pre-Judgment Garnishment of Brokerage Accounts

Florida allows pre-judgment garnishment only in contract and debt actions. Section 77.02 bars a pre-judgment writ in any action sounding in tort, so a car accident or malpractice plaintiff cannot freeze a brokerage account before winning the case. Where pre-judgment garnishment is available, § 77.031 requires the creditor to file a verified motion and obtain a court order. The creditor must also post a bond of at least double the debt demanded. The bond covers the defendant’s costs, damages, and attorney’s fees if the creditor obtained the writ improperly.

Few creditors are willing or able to commit that kind of capital to a collection action before they have won the case. As a practical matter, debtors face the greatest garnishment risk after a judgment is entered.

How to Respond to a Brokerage Account Garnishment

A debtor whose brokerage account has been garnished has 20 days from the notice to file a sworn Claim of Exemption. The claim is filed with the clerk, and copies go to the creditor and the brokerage. Retirement accounts, entireties accounts, and funds traceable to Social Security deposits or head of household wages can all qualify for release.

Once the claim is filed, the creditor has 8 business days to object if it was hand delivered, 14 if it was mailed. If the creditor misses that window, the clerk dissolves the writ without a hearing. A debtor who misses the 20-day deadline faces a default Final Judgment of Garnishment, and the funds go to the creditor whether or not an exemption applied. The garnishment process also requires the creditor to follow its procedural rules strictly, and writs that fail to follow the statutory requirements of Chapter 77 can be challenged and dissolved.