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What assets are protected under Florida law?

If you are lucky to accumulate a significant amount of assets, you require some asset protection. An asset protection strategy cushions you against unforeseen lawsuits that may allow creditors to collect your property.

In Florida, asset protection is a legally accepted way to protect savings and property against bankruptcy and legal suits. Therefore, under Florida law, you can safeguard your cash, businesses, investments, and real property against unlawful collection.

But does the law exempt all assets from civil judgments and lawsuits? Here we look at five assets that have the protection of the Florida statutes.

1.  Retirement Plans

Under the Florida ERISA law, a qualified retirement plan has protection against court judgments. Such programs include 401(k) and 403 (b), allowing active employees to sign up for a contribution package. Therefore, the law prevents creditors from accessing the financial assets and benefits you accumulated in your retirement contribution plans.

Retirement plans also enjoy protection against bankruptcy. However, Florida signed out of the bankruptcy exemptions that guide federal states. As a result, legislative limitations allow you to claim only state law exemption when you file for bankruptcy.

2.  Employee Pension Accounts

Individual Retirement Arrangements (IRAs) are special accounts that allow business owners and corporate leaders to give pensions to their former employees after retirement. The Florida law guarantees complete protection to all IRA plans. The exemption also includes IRA accounts allowing financial rollovers. Whether you created an IRA account in Florida or a different state, your IRA account is safe from civil court rulings and bankruptcy.

Florida’s statutes state that any money or asset that you receive as a beneficiary or member of a retirement plan or profit-sharing policy is free from claims by a creditor. Other structured pension plans that support umbrella groups like teachers, state officers, and county workers also enjoy protection.

Despite the federal protection for retirement plans against bankruptcy, some courts still dispute whether such accounts should be exempt from civil judgments.

3.  Tenants by the Entireties

These include any property that you jointly own as a couple and an inseparable family unit. Under the law, a creditor cannot serve you with a notice of property collection without your mutual consent. Similarly, any assets you own jointly enjoy legal protection against collection by a creditor hired by your spouse.

However, the Florida law does not guarantee an automatic protection of a joint property. The law recognizes you as tenants by entireties only if you meet the required six unities. These include; survivorship, interest, possession, title, time, and marriage.

Therefore, if you have any property you owned solely before marriage, be sure to transfer ownership to qualify for tenancy by the entirety. This will cushion you against unforeseen creditors’ notices.

Upscale model home

4.  Life Insurance

In Florida, any cash value that belongs to a life insurance policy is exempt from collection, attachment, or legal proceeding in favor of your creditor. As a result, you can enjoy all universal and whole life policies that earn value after time. Regardless of any debt, you’ll be sure your cash value is safe from creditors.

Similarly, any death benefit that comes from your insurance life policy has federal protection against creditors’ liability. However, to enjoy federal law protection, be sure to check that your policy will not go through a court probation to determine the beneficiary when you pass away.

If you don’t specify a beneficiary forthwith, your proceeds will not qualify for asset protection and may be subject to creditors’ claim when you pass on.

Here is an example:

Clinton signed up for life insurance coverage worth $2 million. However, he forgot to enlist his wife, Emma, to benefit from his proceeds. Unfortunately, Clinton passed away, leaving a huge debt in hospital bills and credit cards.

Since Clinton had no beneficiary for his life insurance claims, his policy had to undergo a court probate. The court disposed Clinton’s life benefits as subject of claim by creditors. His wife lost all life insurance benefits.

5.  Annuities

Annuities are essential tools for asset protection because the Florida statutes exempt them from claims by creditors. The cash values due from annuities are also free from claims by a creditor.

Although annuities vary, the primary idea is that an annuity allows you to contribute some money that you will receive back as payout after a set time.

Although annuities are essential assets, only those created by life insurance companies enjoy asset protection. A private annuity agreement is not a beneficiary of asset protection.

For example, Joe owns a successful restaurant in Florida. He enters an official annuity contract, worth $1 million, with a Life Insurance service provider. Later, a customer sues Joe for an accident he encounters at his restaurant. Joe’s annuities survive creditor’s liability following a Florida court order.

Asset Protection: Is It Worth?

If you own a property in Florida or reside permanently in the state, you require asset protection to cushion you against credit liability and bankruptcy.

When it comes to credit liability, Florida has one of the best asset protection laws. The statutes offer protection for annuities, joint property, life insurance, pension accounts, and other assets.

Consult an asset protection attorney to check for eligibility and discover if your assets qualify for legal protection.

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