Asset Protection

Following are several exemptions protecting consumers under
Florida Asset Protection Law: Wages, earnings or compensation of the head of household which are due for personal labor or services, including wages deposited into a bank are exempt from garnishment under Section 222.11 of the Florida Statutes. Cash value in insurance are protected from creditors' claims by Florida Statutes. While a Florida resident is alive, the cash value of any insurance policy he owns on his life or on other Florida residents is exempt from creditor's claims. The protection afforded to the cash surrender value of a life insurance policy is only for the benefit of the owner/insured. Death benefits are not protected from the creditors of the policy beneficiary. A popular financial product for asset protection planning is annuities. Florida courts have generously interpreted this statutory exemption to include all annuities. The protection of annuities extends to proceeds withdrawn by the owner. Florida courts have held that funds withdrawn from an annuity received by a debtor remain protected as long as the funds can be accurately traced to a bank account readily accessible to the debtor. In Florida, retirement plans are protected from creditors. Florida Statute 222.21(2)(a) states that any money or other assets payable to participant or beneficiary in a qualified retirement or profit sharing plan is exempt from all claims from creditors of the beneficiary or participant. Disability income benefits under any disability insurance policy are exempt from legal process in Florida. Florida residents may protect up to $1,000 of equity in an automobile. The fact that a debtor needs his automobile to go to work does not protect the vehicle from creditors to the extent that the debtor's equity (value less loan amount) exceeds $1,000. Florida prepaid college tuition plans and Florida's 529 college saving plan are protected from creditors by Florida Statute 222.22 There are also advanced asset protection plans that may be custom designed to fit the individual needs. Planning must be done prior to any lawsuit or the anticipation of a creditor suit. This can avoid Fraudulent Conveyance. The most important issue in any asset protection plan is whether or not previous planning transactions constitute "fraudulent conveyance" as defined by Florida Statutes. A fraudulent transfer is a debtor's transfer of legal title to his real or personal property to a third party with the intent to hinder, delay or defraud a present or future creditor. A fraudulent conversion is a debtor's conversion of non-exempt real or personal property subject to creditor attack to a different type of property, still owned by the debtor, which new property is exempt or immune from creditor attack. Florida Statues provide that a creditor can sue to overturn a transfer or conversion up to fours years after a conveyance was made or obligation incurred. Asset protection planning and transfers become immune from fraudulent conveyance suspicion four years after the planning takes place.