How do I protect my home from creditors in Florida?
Trusts for Asset Protection: Trusts are a key tool in Florida for asset protection. Different types of trusts, such as irrevocable trusts, can be used to legally shield assets from creditors. Assets placed in certain types of trusts may no longer be considered personal assets, making them less vulnerable to claims.
The best-known Florida asset protection strategy is the Florida homestead. The Florida Constitution protects a debtor's primary residence from levy and execution to collect a debt.
Florida statutory exemptions protect certain assets of a debtor from being seized by creditors to satisfy a judgment. Notable exemptions include the homestead exemption, which protects the debtor's primary residence regardless of value, personal property up to $1,000, and wages of a head of family.
Transfer Assets
Creditors or litigants cannot seize assets you do not own—assuming the asset transfer does not violate illegal conveyance laws. Giving assets directly or through an unbreakable trust to your spouse, children or other relatives is an easy and effective way to protect those assets.
Your home and Florida's homestead exemption
If you own the home you live in, your home is protected from all creditors except those holding a mortgage or lien on your residence. You can exempt or protect your home and up to one-half acre of land from any forced sale if you live in an incorporated area.
The sheriff's department can seize: Personal property: movable things (e.g., cars, horses, boats, furniture, jewelry) owned by the debtor. Real property: land and buildings owned by the debtor.
Irrevocable Trusts
Using an irrevocable trust allows you to minimize estate tax, protect assets from creditors and provide for family members who are under 18 years old, financially dependent, or who may have special needs.
Homestead property
In Florida, a homestead is exempt from creditor's claims, thus it is not considered to be part of a decedent's probate estate. As a result, a Florida homestead can be transferred to the heirs without undergoing probate.
- your debt is all unsecured.
- your income can't be garnished.
- all of your property is protected by exemptions (you don't own anything with a lot of value, like a house or vehicle with equity, or household items), and.
The Florida Homestead Exemption
Article X, Section 4 of the Florida Constitution states that a creditor who has a judgment against you for the payment of money cannot force you to sell your home to satisfy that judgment.
What is the strongest asset protection?
- Offshore asset protection trusts.
- Family limited partnerships.
- Certain insurance policies.
If you want to protect assets with a trust, some irrevocable trusts will do the trick. When you put money in an irrevocable trust—one you don't control and can't revoke—then the money probably won't be considered yours anymore, and it won't be available to creditors.
Lenders must obtain a judgment before any action can be taken. This means that the credit card company must file a lawsuit against you and win in court before they can take any property. Furthermore, in some states, homestead exemptions protect your home from creditors.
Your home provides security to the lender that you would pay back the debt. If you owe money for most other debts like credit cards and medical bills, you (usually) did not sign a security agreement. So, the creditors cannot seize your home to pay the debt.
In Florida, state law limits the annual increase in the assessed value, not market value, of homesteaded property to 3% or the Consumer Price Index (CPI) whichever is less. This is also called Save Our Homes. When homesteaded property is sold, that limitation is removed and the property is reassessed.
Florida Homestead Protection
Under Florida law, a person's primary residence is completely protected from judgment creditors. A person who sues you cannot cannot take your house to satisfy a money judgment.
A creditor first must sue you and get a money judgment to garnish your wages. This is a legal term for taking money from you to pay a debt. A creditor can also garnish your bank account, as well as any money that is owed to you, such as a government benefit, or a child support payment.
You can't go to jail for not paying a judgment in Florida. Not paying a money judgment is not a crime. While the law gives creditors many opportunities and tools to collect on its judgment, it is up to the creditor to use those tools to collect.
In Florida, a “void judgment” is so defective that it is deemed never to have had legal force and effect, while a “voidable judgment” is a judgment that has been entered based upon some error in procedure that allows a party to have the judgment vacated, but the judgment has legal force and effect unless and until it ...
Another reason to put your home into a trust is to avoid federal estate tax. A revocable trust and an irrevocable trust can help you avoid federal estate tax if they are drafted correctly and the trust assets are funded to the trust(s) properly.
What is the best trust to put property in?
Benefits of a Trust
There are many types of trusts, but the revocable living trust is probably the most common and useful for holding title to real estate. The major benefit from holding property in a trust is that the property avoids probate after your death.
Asset protection trusts offer a way to transfer a portion of your assets into a trust run by an independent trustee. The trust's assets will be out of the reach of most creditors, and you can receive occasional distributions. These trusts may even allow you to shield the assets for your children.
If you live in Florida and you have unsecured creditors hounding you for payment, you are protected from having your home foreclosed on so that payment to them can be made. Those creditors are legally able to put a lien against your property, but you will not lose it to foreclosure.
These states include Alaska, Delaware, Utah, and Nevada. Florida does not have a statute enabling self-settled domestic asset protection trusts. This means that Florida law follows a public policy against self-settled trust providing asset protection for the trust maker.
Who Can Claim A Lien On My Property? Contractors, laborers, materials suppliers, subcontractors and professionals such as architects, landscape architects, interior designers, engineers or land surveyors all have the right to file a claim of lien for work or materials.
