Understanding how to protect your assets from creditors is crucial. Most people don’t realize how vulnerable their financial situation can be until the unthinkable happens. They may be involved in a car accident, resulting in a lawsuit against them. They may have to shut down their small business due to a poor economy or price hikes on supplies. When unexpected events like these occur, you can owe a lot of money to one or more creditors.
A Fort Lauderdale asset protection lawyer at Kramer Green can answer your legal questions and give you the advice you need to help you protect your assets from the reach of creditors. Together, we will ensure that you have the legal knowledge and tools to safeguard your assets for the benefit of your family.
Understanding Asset Protection
Asset protection involves different legal strategies that allow you to protect your assets from creditors or others to whom you owe money. Eligible assets can include real estate, cash, businesses, and investments. By taking appropriate steps to protect your assets, you can avoid losing everything you have worked so hard to build because of a lawsuit or debt you owe. While asset protection strategies are always useful, they often only work when you implement them before you accrue debts or liabilities.
Asset Protection in Florida
Florida has some of the strongest laws possible for asset protection. The Florida Constitution, Florida statutes, and Florida common law combine to create many ways for a debtor to safeguard assets from creditors. You can use these completely legal methods of protecting your assets in case of a civil lawsuit, business collapse, or failed investment.
Homestead Protection
Florida has one of the most well-known and expansive homestead exemptions in the United States. Article X, Section 4 of the Florida Constitution exempts your homestead property, or your primary residence, from creditors, no matter its value. However, the law limits the amount of property the homestead exemption covers. The homestead exemption is limited to an ½ acre lot within a municipality or 160 acres in an unincorporated area.
Your primary residence may have additional protection if you are married. Married couples typically own property as tenants by the entireties, meaning the property is owned as an indivisible unit. As a result, a creditor generally cannot reach property held as tenants by the entireties when seeking to collect a debt owed by only one spouse.
Head of Household Wage Exemption
Another major form of asset protection under Florida law is the unlimited head of household wage exemption. All wages that a head of household earns are exempt from creditor collections. This protection extends to wages deposited in a bank account for up to six months.
A person qualifies as the head of the household if they provide more than 50% of the support for someone they are obligated to support. The most common examples of heads of households are a child or a spouse. However, when an employee controls a business, the exemption is problematic.
Retirement Accounts
Pension or 401(k) plans and IRAs are exempt from creditors seeking to collect debts under Florida law. These accounts can hold unlimited amounts of money and continue to grow on a tax-deferred basis regardless of any debts the owner of the accounts may owe.
Life Insurance Policies
The cash value of a life insurance policy on your own life is not subject to creditor claims. Although the proceeds of a life insurance policy are non-exempt and subject to creditor claims once a beneficiary receives them, any cash value of the policy during the owner’s life is protected.
Let Us Help Protect Your Assets Today
A Pembroke Pines asset protection attorney at Kramer, Green, Zuckerman, Greene & Buchsbaum, P.A. stands ready to help you take the necessary steps to protect your assets from creditors. 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.