When you owe debts stemming from a failed business endeavor, a lawsuit, or a poor investment, you must protect the property you own from creditors seeking to collect those debts. As your real estate is often your most valuable asset, protecting it from creditors often is a major goal for many Florida residents. Fortunately, Florida law provides ample opportunity for individuals to shelter their real estate from creditors.
You can rely on a Florida asset protection lawyer at Kramer Green to work diligently to protect your real estate from creditors to the greatest extent possible. We will work with you to find the best ways to achieve this goal so that you can protect the residence that you have worked so hard to earn. Here are the four main ways you can protect your real estate from the reach of creditors.
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The Florida Homestead Exemption
Article X, Section IV of the Florida Constitution protects your homestead, or your primary residence, from creditors seeking to collect debts from you. In other words, if a creditor has a money judgment against you for a debt that you owe, the creditor cannot force you to sell your primary residence to satisfy that debt. Unlike in many other states, judgments do not become a lien on your homestead.
The definition of homestead under Florida law is also quite broad. It extends to up to one-half-acre lots within municipalities. Furthermore, the homestead extends up to 160 acres outside municipalities, even if the adjacent properties have separate legal descriptions or tax numbers.
Two or more persons can jointly own a homestead. However, to qualify as a homestead for the exemption, all owners must use the homestead as their primary residence. Otherwise, it can jeopardize the homestead exemption and open up the property to seizure by creditors to satisfy debts.
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Tenancy by the Entireties
You also may be able to protect real estate from creditors if you and your spouse hold title to it as “tenants by the entireties.” When a property is titled in this manner, and a court enters a judgment against one spouse for a debt the spouse owes, the creditor cannot demand that the property be sold to reach that spouse’s interest. Essentially, the property cannot be bifurcated or divided to allow the creditor to reach one spouse’s interest in the property; since the spouses hold the property as tenants by the entireties, they hold an undivided interest in the property.
However, this form of protection is ineffective if the spouses owe a joint debt and the judgment is entered against both spouses. In that case, the real estate likely would have to be a homestead, or the spouses’ primary residence, to enjoy creditor protection. Likewise, if the spouses divorce or one spouse passes away, the property would lose tenancy by the entireties status, and a creditor of one spouse thus could execute against that spouse’s one-half interest in the property.
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The Limited Liability Company
For real estate other than your primary residence, such as a second home, vacation home, or rental property, the limited liability company (LLC) likely offers the most protection. The LLC will protect its members, or the property owners, from personal liability resulting from the property at issue. Additionally, any creditor with a judgment against the LLC cannot reach your other property holdings to satisfy the judgment. The only remedy for the creditor is a charging order or lien against the LLC’s cash or property distributions to the debtor member. A charging order or lien gives the creditor very little legal recourse to satisfy its debt, as there typically is no requirement that the LLC distribute cash or property to the debtor or member.
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Trusts to Protect Real Estate
Irrevocable and revocable trusts and land trusts are other tools that may work for some individuals to protect real estate holdings from creditors in some situations. Trusts are more complex forms of asset protection that are not suitable for everyone. For instance, a revocable trust can effectively protect your assets for beneficiaries, but it will not shield your non-homestead real estate from the reach of creditors. An irrevocable trust can effectively protect your real estate from creditors. Still, depending on your needs, you cannot “undo” the trust once you have executed it, which can be problematic. In some cases, a land trust may be preferable.
Contact Our Office Today for Your Asset Protection Needs
The asset protection attorneys of Kramer, Green, Zuckerman, Greene & Buchsbaum, P.A. are ready to assist you in protecting your real estate assets from the reach of judgment creditors. We know how hard you have worked to acquire your assets over time and want to help you preserve them.
As a result, our objective is to take all actions necessary to protect your wealth for your and your family’s benefit. Contact our office today at (954) 966-2112 or reach out to us online to schedule a time to discuss your legal issues with our attorneys.