In Florida, several vehicles are available to protect your assets, including Florida residency, homestead protection, tenants by entireties, statutory exemptions, and business structure strategies that effectively limit your personal liability:
- Florida residency. Florida statutes define 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.” Although there is no waiting period to begin establishing Florida residency, courts take into consideration various factors in determining whether residency has been established. These factors include maintaining a Florida address, obtaining a Florida driver’s license, filing tax returns in Florida, formally declaring Florida residency, and employment in Florida.
- Homestead protection. Florida has extremely liberal homestead protection laws that apply to a Florida resident’s primary residence. The equity in a person’s primary residence cannot be seized by a creditor. These laws are not limited by type of residence—they apply to single-family homes as well as condominiums, manufactured homes, and mobile homes. There is no monetary cap for homestead protection. Therefore, it is possible for a Florida resident to invest unlimited funds in his Florida residence without concern that his assets will be seized by a creditor.
- Tenants by entireties. Florida offers common law protection to spouses who jointly own property. Tenancy by entireties means that both spouses share full ownership of the property and a creditor cannot seize the assets unless it has rights against both spouses. Transfers of property cannot be made without the consent of both spouses. Although tenancy by entireties is an effective means of asset protection, it is not without risk. Divorce or death of a spouse will alter property rights and may make your assets susceptible to seizure by a creditor.
- Statutory exemptions. A number of positive statutory exemptions exist in Florida to help individuals protect their assets:
- Salary and wages. The wages of the head of household are exempt from garnishment under Florida law. Unlike most states, which only exempt a specific portion of your assets from garnishment, Florida’s wage protection is liberal. All wage and salary income of the head of household is protected from creditors.
- Life insurance policies and annuities. The cash value of insurance policies and annuities are protected from creditors by Florida law. Annuities are one of the most popular strategies available to protect one’s assets; annuities structured between family members are also protected, making annuities one of the most flexible ways to structure your assets.
- Pensions, profit sharing, and retirement plans. Many IRAs and retirement plans are protected and cannot be touched by creditors. However, these plans must be held in a Florida institution or branch. Retirement policies that are held out of state are subject to the laws of that state.
Partnerships/LLCs. You can also structure your business in a partnership or limited liability company in a way that limits your liability and shields your assets in Florida. There are many strategies and factors to consider when determining which strategy will best suit your needs. Learn more about structuring your business to protect your personal assets from creditors.