There are numerous ways to legally protect your
assets from creditors. Taking advantage of available property
exemptions and protections is not improper if handled in an appropriate
way. Our office can guide you through this difficult process.
One key factor for an individual to consider is
the homestead protection. Most states offer some form of homestead
protection from creditors (not to be confused with the homestead
real estate tax exemption offered in many states). Florida is
one of a hand full of states that offer an unlimited homestead
exemption. The purchase of a homestead is generally considered
the first and most important step in protecting assets in Florida.
The protection takes effect immediately upon closing on the property
and taking up residence with the intent to permanently reside
in the home. The property must be titled in the individuals name,
not a trust or corporation.
Other
exempt assets in Florida include annuities, cash surrender value
of like insurance policies issued upon your life, Florida Prepaid
College Trust Funds, Medical Savings Accounts, IRA's and certain
other retirement funds and disability benefits. We can assist
you in developing a plan that is right for you.
Asset
Protection and Bankruptcy Reform
Asset
protection planning has changed dramatically under the new bankruptcy
reform laws. Responsible planning should be conducted with an
eye towards the effect of these new laws.
One aspect
of the new legislation concerns limiting the homestead exemption.
Five states (including Florida) now offer their residents an unlimited
homestead exemption. Many people facing large money judgments
have moved to states like Florida, purchased a home with their
available funds, waited an appropriate time period (usually one
year) and filed for bankruptcy. Several provisions in the new
laws were designed to limit this form of planning.
One new
provision limits the homestead protection available in bankruptcy
if the Debtor has not owned his or her home for a specified period.
A second provision prevents a debtor in bankruptcy from claiming
as exempt any equity fraudulently transferred into the home within
the past ten years. This may lead to an unusual situation where
an individual's home may be protected from creditors as long as
the debtor steers clear of bankruptcy for the ten year period.
Asset protection planning must then take into consideration the
possibility that a creditor may file an involuntary bankruptcy.
Competent planning must take into consideration all of these factors
and many others. Call us for a free initial consultation to see
if asset protection planning may benefit you.
