(Mar 30, 2023)
4 Reasons Why Asset Protection is Critical in Florida:
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Creditors may take your property if they win a lawsuit against you.
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If you declare bankruptcy, the trustee may take some or all of the property.
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You might need to sell some of your property to pay off debts, but you can keep it all for yourself and your family members with asset protection.
- Homestead exemption provides Florida homeowners protection from the forced sale of their home and its contents.
Common Issues in Asset Protection Planning
The most common mistakes made by Floridians when protecting their assets are: not taking the proper precautions to avoid liability, not having an adequate asset protection plan in place, being unaware of the limitations of Florida's homestead law, and not understanding the difference between federal exemptions.
Revocable trusts
There are some blatant misconceptions in the world of asset protection, and one of them is the belief that a revocable trust can cover an asset for protection. You can indeed place your estate into a revocable trust for asset protection, but this doesn't mean that you are fully protecting your estate any more than if it were held outside of the trust.
Having basic estate planning documents in place is an excellent start to protecting your estate. It is important to remember that these documents do not protect against Life's most common risks: divorce, mismanagement, incompetence, and fraud.
Although these documents are essential in protecting your estate, they do not provide the same level of protection as a proper estate plan; a 360-degree plan with asset protection. An asset protection trust is the best expert-recommended estate planning vehicle for safeguarding your wealth from creditors.
Fraudulent transfers
A common mistake that individuals make in estate planning is fraudulent conveyance or transfer. In most cases, assets are transferred during estate planning without the intent of defrauding anyone. But some transfers may not pass muster - for instance, moving real estate or other assets into your spouse's name is considered fraudulent when intended to evade creditors or avoid transfer taxes.
For guaranteed asset protection, all transfers must be legal and taxed appropriately. You should make transfers way before and not just after creditors come for you.
Waiting before is too late
A deadly mistake is to believe that you will never need asset protection. Perhaps a forgivable mistake is to think that common estate planning caters to all your asset protection needs. Life is full of nasty surprises. In a few seconds, empires that took years to build have crumbled.
Don't wait until it's too late – don't stash money away without getting any protection! To protect yourself and your assets (yes, including those under your mattress!), it's vitally important that you rely on the guidance of a lawyer who specializes in your field to ensure that you're protected from any potential legal trouble.
Presumption of marriage
One of the most effective instruments for asset protection in marriages is tenancy by the entirety. Nonetheless, this only works for legally married couples. Tenants by the entirety is a co-ownership form of real estate ownership in which the spouses of a married couple own the property in their capacity.
It makes the jointly owned assets untouchable by creditors of either spouse. Nonetheless, it is essential to note that only a married couple can own property under-tenants by the entirety. The asset protection under this arrangement doesn't apply to cohabiting partners.
Titling issues
Florida has unique options for titling real estate for asset protection, and determining the proper form of ownership for an asset is called asset titling. You can either open your doors to creditors, fraudsters, and the IRS or protect the family against creditors, reduce estate taxes, and pass on family wealth to the next generation with the title you choose for your estate or business.
You should make sure you have a clear title to the property. Establish that you are the property owner and that there are no hidden creditors or liens. You should also have clear title insurance that verifies the ownership.
The most common titling forms in business are limited partnerships (LP) and limited liability companies (LLC). One general partner and at least one limited partner make up a limited partnership. General partners are potentially liable for all partnership obligations. Limited partners have limited liability.
There may be one or more investors, partners, estates, limited partners, trusts, or corporations as members in a limited liability company. A member of an LLC has the same limited liability as a shareholder in a corporation. They pay taxes as a partner in a partnership.
In a nutshell
There are many factors and issues to consider when planning asset protection in Florida. The best way to protect your wealth is to create an asset protection plan. This is estate plan protects your assets by moving them away from the reach of creditors. If you would like more information on asset protection and how we can help, contact us today.
(Mar 30, 2023)
