How Can An Asset Protection Attorney Help Me?

Have you ever considered what would happen to your property if a court entered a judgment against you? The party in whose favor the judgment is granted — the “judgment creditor” — will be entitled to collect on your assets to satisfy the judgment debt if you fail to pay them. You may have heard rumors of someone defaulting on loan payments only to have their property seized soon after, or perhaps you’ve seen a film where unhappy customers sue small business owners for everything they have. You most likely will not know that these people could have avoided losing much of their property if they had hired asset protection attorneys beforehand.

While the idea of losing hard-earned money and property in this way may be alarming, there is some good news: Florida has some of the strongest asset protection laws in the country. However, you’ll only be able to take advantage of these laws if you have a basic understanding of the ways they can assist you. Read on to learn how asset protection works, what Florida law protects, and why working with an experienced attorney is essential to safeguarding your wealth.

What Is Asset Protection?

In many ways, asset protection can be thought of as a form of financial planning. The term simply refers to the use of certain laws and legal processes to safeguard one’s property from judgment creditors, meaning they can’t collect on that property to settle the debt you owe to them. The legal act of asset protection provides you with the steps necessary to protect your property or your estate from creditors who may have won a lawsuit against you. Losing or even simply engaging in a lawsuit can be financially crippling. Asset protection ensures that creditors such as banks or loan companies have limited access to your valuable assets.

While not all of your property can be secured in this way, there is a wide range of property that can, including real estate, investments, income, and business interests. Both businesses and individuals need to protect their assets within the bounds of the law. This limits the access that creditors can have to your personal assets when making a claim.

Asset protection has to comply with specific state debtor-creditor laws to ensure that illegal practices such as fraud, tax evasion or concealment are avoided. Although it is unlawful to attempt to hide your assets from creditors (for example, by transferring assets to relatives), asset protection falling within the bounds established by Florida’s Constitution is perfectly lawful.

Why Is Asset Protection So Important?

Asset protection enables you, the debtor, to protect your assets in the event of claims or liabilities made against you. It’s done in accordance with state laws in order to avoid illegal practices such as tax evasion, or fraudulent transfers. Keep in mind that different states have different debtor-creditor laws if your assets aren’t protected.

In the event you are being sued, your assets can be attached in order to satisfy any judgment against you. This means, under certain circumstances, you could risk losing your home, family heirlooms, and anything else important to you.

There are several reasons why it is a good idea to start thinking through how you might safeguard your assets, even if you aren’t facing a lawsuit. Firstly, if you work in a profession in which you are likely to be vulnerable to lawsuits (medical malpractice suits, for example), it’s always a good idea to have an asset protection plan in place.

Secondly, if you are a business owner, it is important to consider how you can safeguard your personal assets in the event that a creditor with a claim against your business attempts to execute against your personal assets. It’s especially important for business owners to protect the individual as opposed to corporate assets, ahead of time. If a lawsuit is filed against you and your individual assets are not properly titled you run the risk of losing them to creditor claims even if it is a business-related lawsuit.

Thirdly, even if you don’t work in a profession in which malpractice suits are a risk, there are several other sources of legal liability you may encounter over your life. For example, causing a car accident or accruing significant credit card debt may result in lawsuits and collections against you. For this very reason asset protection planning is not something for the ultra rich — rather, it is a worthy investment for anyone wanting to ensure their property or estate remain secure.

Florida’s Asset Protection Legal Framework

Florida’s constitution is the primary source of asset protection law. It includes one of the founding elements of the state’s protection regime: homestead protection. Homestead protection essentially ensures that your home can never be taken away from you by creditors. In addition to the Constitution, Florida’s statutes significantly extend the protection regime.

Over the years, the legislature has enacted several statutes that mean that certain retirement annuities, investments, and other property are protected from judgment debt collection. Florida’s common law has been developed through years of legal interpretation of the Constitution and statutes to flesh out this framework further.

Florida’s legal regime is “debtor friendly.” That means it exempts a fairly wide range of debtor property from collection by judgment creditors. The Employee Retirement Income Security Act (ERISA) as well as federal bankruptcy laws prevent retirement plans from being viewed as seize-worthy assets. Many states also exempt homestead property as well as personal property, such as clothing or toiletries, from being deemed assets.

What Assets Are Protected Under Florida Law?

Florida exempts a wide range of debtor property from collection by judgment creditors. Below are some of the most important protections available under Florida law.

Homestead Protection

In terms of the Florida Constitution’s homestead exemption, single-family homes, regardless of their monetary value, are protected from collection by creditors. While this protection has no upper-value limit, it is limited to half an acre of property if the home is in a municipality, and 160 acres if it is in an unincorporated county. However, the debtor must actually live in the home to qualify for protection: vacation homes are not covered.

Joint Tenancy by the Entirety

Joint tenancy by entirety or tenancy by entirety (TBE) is a special type of joint ownership reserved for married couples, which treats their joint estates as a single, indivisible unit. In other words, they both own the property in question equally in indivisible shares. This isn’t a means to split the property 50/50 but instead gives each spouse full ownership of the property.

This means that without consent from the other spouse, an individual can’t sell or mortgage the property in question. Assets held in this way are usually protected from collection by judgment creditors who have a claim against only one of the spouses. Creditors cannot attach or enforce judgment against the property if only one spouse has debts that need to be paid.

This also means that in the event of one spouse’s death, the surviving spouse becomes the sole owner of the property without the need for any probate proceeding. Keep in mind that this only applies to relationships where the partners are married to one another — it does not include any other form of relationship, platonic or otherwise.

Head of Household Wages

The head of the household is the individual who provides more than 50% of the financial support for some other member of the household (e.g. a spouse or child). These wages are excluded from creditor collection.

Pension Plans (401k), IRAs, Life Insurance, and Annuities

Pension plans, IRAs, and annuity payouts are all exempted. The cash value of the proceeds of life insurance policies is also protected from collection by the policy owner’s creditors.

Other types of property are also exempted from creditor collection, but these are some of the most relevant examples. It is important to bear in mind that to qualify for these protections, you must be a permanent resident or own property in Florida.

Asset Protection Strategies

There are various ways you can protect your assets and various strategies available that can be used. It is best to go over the varying strategies and tools with a trusted and reputable asset protection attorney. Below are several examples of different strategies for asset protection.

Asset Protection Trusts (APTs)

One approach is to open an asset protection trust (APT) to hold your assets. An APT is a legal arrangement designed to set up a trust that shields your property from creditors while allowing you to retain certain benefits from the assets held within the trust.

Limited Partnerships (LPs) and Limited Liability Companies (LLCs)

Another strategy is to use the legal structure of a Limited Partnership (LP) or Limited Liability Company (LLC) to protect your assets. A creditor can only collect against a debtor’s interest in a multi-member LLC by way of a charging order (i.e. a lien on any distributions granted by the LLC to the member). They cannot directly access the LLC’s property.

It’s important to have an independent business entity that separates your business assets from your personal assets. This will ensure that personal assets are protected if the business is faced with a lawsuit or claim.

Land Trusts

Choosing a land trust ensures that an entity takes ownership or authority over a property. This means that the property itself can be kept out of probate and in some circumstances ensure that true ownership of the property is kept anonymous.

There are two different types of land trusts such as the conservation land trust (which is to protect wildlife and/or historical sites) as well as a title-holding land trust (which allows the owner to maintain property rights and control anonymously).

Ladybird Deeds (Enhanced Life Estate Deeds)

With a ladybird deed (also known as an enhanced life estate deed), the person who owns the property (the grantor) transfers the property to themselves. Even if the property will later be bequeathed to someone else (the grantee), the grantor will have complete control over the property until their death. This enables the grantor to do what they’d like to with the property during their lifetime and upon their death, the property goes to whomever they designate without the need for probate.

Separation of Assets

This can apply in familial situations. Some believe it is better to keep assets separate before and during the course of marriage and/or a relationship. If one partner leaves, the division of assets may not be equitable in terms of contribution. This even applies to separating personal assets from the business.

Homestead Conversion

One of the great benefits of the homestead exemption is that a debtor can make transfers or conversions into a protected homestead, even after judgment has been granted. In other words, they can purchase and move into a large homestead to avoid collection, and there is nothing a creditor will be able to do to stop this.

When to Start Planning: Before vs. After Claims

The process of asset protection planning should ideally occur before a claim is made or a lawsuit arises. Many states have laws that make it particularly difficult to implement protective measures whilst in the middle of a legal battle. Although there are ways to protect your property while you are in the middle of a lawsuit, it is far easier to do so beforehand in order to prevent potential property loss.

Other than making use of the homestead exemption, there are very few lawful ways to protect your assets after a claim has been made or judgment is granted against you. However, there are many strategies you can use before a claim arises. Most importantly, you will always be able to protect your assets more effectively if you take steps to do so before legal liability arises.

Once you have created an asset protection plan, it is important to maintain contact with your attorney. Over the years assets change, and consequently protection plans have to be regularly updated.

Why Do I Need an Asset Protection Attorney?

If you are considering asset protection, you most likely will have done some research and may have discovered a large number of online DIY kits and advice packages. These kits claim that anyone can set up a trust and protect their property without the help of a qualified attorney.

However, due to the sensitive and complicated nature of asset protection, it is always recommended to hire a specialized attorney that is well versed in the ins and outs of property and estate protection laws. Trying to DIY asset protection could potentially get you into trouble — you might accidentally commit fraud or tax evasion — and result in the loss of the assets you were trying to protect.

Hiring an asset protection attorney will ensure that everything you do with your property is perfectly legal. Because different people have different types of assets, experienced attorneys know that they have to tailor each individual asset protection plan to specific clients. There is no specific formula or guide that can be used — asset protection planning is a highly specialized process that involves participation from both you, the client, and your attorney.

Speaking to an attorney with experience in asset protection and foreclosure defense will help you understand what your options are. If you’ve worked hard all your life and been fortunate to accumulate wealth, you should strongly consider developing an asset protection plan with a trusted attorney. This will enable you to determine which assets fall outside the current protection laws and allow you to take steps to ensure that they are better safeguarded.

Protect Your Assets With a Trusted South Florida Attorney

Regardless of your financial status, asset protection planning is your best option for keeping your property safe from creditors. Contacting an asset protection attorney is the first step towards making sure your assets are safeguarded for years to come.

At the Law Offices of Gary I. Handin, P.A., we have helped many valued clients achieve peace of mind by developing an asset protection plan to perfectly suit their needs. Attorneys such as Gary I. Handin can create client-specific plans that will protect your assets for years to come. We offer professional legal services in the areas of business law, real estate, and estate planning.

Contact us at (954) 796-9600 or 1-877-815-4560 today to find out how we can help you!