I often get calls asking me to assist a client with asset protection. Many people believe they need a revocable trust in order to obtain asset protection. However, a revocable trust, which allows the grantor to retain control of their assets as trustee of the trust, provides no creditor protection to the grantor trustee, and is simply a tool for estate planning purposes. In order to use a trust for creditor protection the grantor must give up control of their assets and appoint a separate trustee the who is not legally obligated to act as directed by the grantor.
There shall be exempt from forced sale under process of any court and no judgment, decree or execution shall be a lien thereon, except for the payment of taxes and assessments thereon, obligations contracted for the purchase, improvement or repair thereof, or obligations contracted for house, field or other labor performed on the realty..”
This means that if you own a home, whether married or single, with or without children, condominium or cooperative, regardless of value and regardless of whether you have a mortgage, a judgment creditor cannot foreclose their judgment against your homestead property. Even a municipality is unable to foreclose a code enforcement lien on homestead property. This protection extends past the death as long as your property descends to your spouse or children. Note that if you file bankruptcy, the Florida exemption preempts State law, requiring that you must have resided at the property as your homestead for at least forty months to obtain full protection. Prior to forty months of continuous residency, the cap is approximately $160k. In addition, homestead property is limited to one-half acre in a municipality and one hundred sixty acres in unincorporated areas.
Florida also recognizes a special estate, called tenants by the entireties. This is property owned by married couples, such as real property (non-homestead), bank accounts or brokerage accounts. Under common law in Florida the claims of individual creditors cannot reach properly-created entireties property. In the eyes of the law, property owned by a married couple is treated as one, hence not reachable by creditors or divisible without both spouses conveying the interest.
Michael J Posner, Esq., is a partner in Ward, Damon, Posner, Pheterson & Bleau, P.L. a mid-sized real estate, estate planning and business-oriented law firm serving all of South Florida, with three offices in Palm Beach County. They specialize in estate planning and asset protection. They can be reached at 561.594.1452 or at email@example.com