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Can a Creditor Garnish My Stocks or Brokerage Account?

Whether you have been sued in a lawsuit or had a failed business venture, you may be worried about creditors trying to reach your personal assets. We know you have worked diligently to accumulate assets for you and your family, and we want to help you protect them. The asset protection attorneys of Kramer, Green, Zuckerman, Greene & Buchsbaum, P.A. have the experience and knowledge that you need when you are trying to protect your assets from creditors.

Florida law exempts many but not all investment accounts from the reach of creditors. To properly protect your assets, you must clearly understand which assets your creditors can reach and which assets they cannot. You can better protect your assets by understanding these distinctions and taking steps to convert your property into exempt assets to the greatest degree possible.

Nonexempt Assets Under Florida Law

Non-qualified investment accounts, such as mutual funds, stocks, brokerage, or trading accounts, are nonexempt under Florida law. As a result, they are not protected from the reach of creditors looking to satisfy judgments for debts that individuals owe. Therefore, individuals who have concerns about creditors being able to reach their personal assets should try to minimize any assets kept in these non-qualified investment accounts.

Exempt Assets Under Florida Law

Florida law provides specific exemptions for some investment accounts that permanent residents of Florida own. Since these items of property are exempt, they are unavailable for creditors to reach them to satisfy money judgments that they may have against individuals.

However, you should be aware that some creditors may be able to access assets to pay debts unavailable to other creditors. These creditors may include those who are owed alimony, child support, and federal taxes.

Pensions and Retirement Accounts

Under Florida Statutes Section 222.21, pension money and funds in certain tax-exempt accounts are exempt from legal process by creditors. Covered pension plans include those that teachers, county and state officers and employees, police officers, and firefighters hold. In addition, covered retirement accounts include all tax-deferred retirement accounts, including 401(k) plans, 403(b) plans, IRAs, and Roth IRAs.

Defined Benefit Plans

Florida law protects all defined benefits plans, even if they have a sole owner participant. Previously, questions existed about whether a defined benefit plan with a sole owner participant was exempt, as that plan might not be compliant with the Employee Retirement Income Security Act (ERISA). However, the Florida legislature later amended its statute to exempt all retirement plans, even if they did not comply with ERISA. In addition, an appellate court later confirmed that these plans were exempt from creditors’ reach.

Inherited and Rollover IRAs

Florida Statutes Section 222.21 also specifically provides that inherited and rollover IRA accounts are exempt from creditors. Although the U.S. Supreme Court has held that inherited IRAs are not exempt in bankruptcy proceedings, Florida state law takes precedence when it comes to the ability of a creditor to reach those assets. However, when considering inherited IRAs, it is also necessary to consider any implications of the SECURE Act, which generally requires you to withdraw funds from those accounts over a maximum of ten years, with some exceptions.

Annuities

Annuity contracts are another type of investment account that Florida Statutes Section 222.14 exempts from the reach of creditors. Annuities are investment vehicles that pay money to a beneficiary periodically over a certain amount of time. These contracts may be fixed, in which case the payment is for the same amount over a certain period, or variable, in which the payment amount can vary according to the value of the annuity at a particular point in time. The funds an individual receives from an annuity remain exempt, even when deposited into another account, so long as the individual can directly trace the funds as being from the annuity.

Prepaid College Tuition Plan and Florida’s 529 College Saving Plan

You also may have investment accounts in the form of a pre-paid college tuition plan or Florida’s 529 college savings plan. Florida Statutes Section 222.22 specifically exempts these investments from legal process.

Allow Us to Assist You with All Your Asset Protection Needs

The asset protection lawyers of Kramer, Green, Zuckerman, Greene & Buchsbaum, P.A. are ready to assist you throughout the process of protecting your assets. We know how hard you have worked to accumulate these assets. Our objective is to create an individualized plan that best protects your assets for the benefit of you and your family. 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.

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