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Asset Protection Planning

Palm Beach County Asset Protection Attorney Serving Florida

The phrase “asset protection” is largely misunderstood by both the public and practitioners. The concept of asset protection is similar to tax planning. The United States Supreme Court held long ago that citizens do not have any obligation to pay the maximum amount of potential tax liability. In fact, tax planning is both understandable and expected. Likewise, if you have a choice between leaving assets available for potential creditors, most often the desire to protect assets is desirable. However, Floridians often have an unrealistic expectation of what asset protection is and practitioners (and others with even less expertise) often “over-promise” without understanding some basic rules. For example, some knowledgeable estate planners include both a trust and a will as parts of an overall asset plan, and each has its own specific purpose. A consultation with a Palm Beach County asset protection attorney can help you understand your options and assist with a strategy you are satisfied with. 

Protect Your Assets from Unforeseen Life and Current Events

Many people are not considering their worst-case scenario, and therefore never even consider what happens when the unexpected happens. There is great benefit to protecting your assets both during and after your lifetime. A proper plan can protect you from the following unforeseen life events:

The Need for Long-Term Healthcare

Due at least in part to the advances in the medical field, long-term care is a future reality for most of us. It can also be quite expensive, especially for those of us whose earning days have passed us by. Does your estate consider the financial burden of long-term healthcare?

The Possibility of Business Failure

For as many businesses succeed, the same number fail. Most business owners are relatively unconcerned because they have created some type of business entity that protects their personal assets. However, there are a number of legal circumstances that may allow your creditors to "pierce your corporate veil" and seek to collect on your personal assets, such as your car. If you have, for example, commingled your personal and business assets, essentially using your corporate funds to pay for personal items, your protective veil may be pierced.

Planning for an Economic Downturn

As the coronavirus pandemic has shown us, the stability of the economy is susceptible to many factors. No one can predict a bad economy, but you can plan for it.

Asset Protection Checklist 

Several considerations must be kept in mind during asset protection planning. 

  1. You must evaluate the timing of the transfer.  If you have a judgment against you, except for transfers into your homestead, a Court can set aside any transfer you make to any third person or if you convert an asset that is not exempt from creditor reach into an asset form that would otherwise be exempt.  
  2. The transfers you make in asset protection planning cannot be made if they will leave you insolvent (generally defined as having liabilities greater than your assets).    
  3. Your planning is ultimately going to be evaluated by a Court.  As such, any planning is capable of being upset in some form or another. 
  4. There is a significant difference between transferring assets into an “exempt form” and a form that is merely “protected.”

A Palm Beach County asset protection attorney can advise you on the eligibility and timing of your asset transfer, and help you prepare for the court evaluation process.

Assets Exempt from Creditors in Florida

Under Florida law, seven asset classes are generally exempt from creditor attachment.

  • A homestead owned by a natural person up to one-half acre inside a city or municipality, or 160 acres outside a city or municipality (such as in an unincorporated portion of the county) is exempt from creditor attachment (with significant limits in bankruptcy).  
  • Florida law also exempts the cash value and proceeds of both life insurance and annuities, as well as interest earned in qualified plans and Individual Retirement Accounts (IRAs).  
  • Wages paid to a head of household (who doesn’t control their own salary) are generally exempt from creditor attachment. 
  • Florida law also recognizes that property owned by husband and wife as “Tenants by the Entirety” as exempt from the claims of only one spouse. 

By contrast, entities such as limited liability companies and limited partnerships are “protected” from creditors, meaning that a creditor’s rights are limited by statute. Specifically, a creditor is generally only entitled to a “charging lien” against a partner’s distributive share, which means that when a distribution comes out of the limited liability company or limited partnership, the creditor can seize the same, however, the creditor cannot force a distribution. If the partnership or limited liability company interest is owned in an exempt form, the distribution may not be reachable at all.

Our attorneys, who practice in Palm Beach County and throughout the state of Florida, can help you review your current assets, examine your existing financial and estate plans, and evaluate any underlining risks.

Is Your Home Protected in a Lawsuit in Florida?

Florida's homestead law protects a Florida resident's primary home from levy and execution by their judgment creditors through liens.

Furthermore, the law protects unlimited amounts of value in the debtor's Florida home and also protects manufactured homes, condos, and mobile homes. One of the reasons Florida's homestead protections are so strong is because it comes directly from the Florida Constitution.

Nonetheless, Florida's homestead protections are not without exceptions, some of which include:

  • State and property taxes and IRS tax liens
  • Liens given to purchase the property (such as mortgages)
  • Mechanics' liens on the property for improving, building, or repairing your property
  • Homeowner Association (HOA) dues
  • Liens recorded prior to acquiring your homestead under certain circumstances
  • Property acquired through fraud or a crime

Can a Creditor Take My Car In Florida?

A creditor might be able to take your car in Florida. Generally, creditors will only take a vehicle if your car has value. If you aren't making payments on your debts, you will start to receive phone calls from debt collection businesses, or creditors. Under certain circumstances, a creditor can sell your property and apply that money to your debt; but when it comes to cars, creditors understand that without a car, you won't be able to work and any real hope of collection has been effectively dashed. 

Is an IRA Protected from a Lawsuit in Florida?

Qualified Retirements

Qualified retirement plans are the most common type of protected retirement account, as they enjoy protection under the federal ERISA law. These ERISA-protected plans include 401(k) and 403(b) plans and are generally exempt from bankruptcy and civil court judgments. Rollover IRA accounts are also usually protected.

Simple Employee Pension IRA Accounts 

Another protected form of retirement account is called an employee pension IRA or SEP-IRA. These are variations of IRAs and are commonly used by business owners who want their employees to have retirement benefits. These accounts are protected under federal laws for purposes of bankruptcy, but there has been some disagreement between the various courts as to whether states should be allowed to exempt SEP-IRAs from civil court judgments. In Florida, SEP-IRAs are protected from creditors. 

What to Expect When Working With Our Florida and Palm Beach County Asset Protection Attorneys

There are a number of assets protection tools that a Palm Beach County asset protection attorney can help you understand and implement. An attorney at our firm can help in the following ways:

  • Provide advice, strategy, and counsel directed specifically to your unique situation. A Florida and Palm Beach County asset protection attorney at Comiter, Singer, Baseman, & Braun understands that every case is unique and we have the experience to understand the complexities of your situation and how to best address them.
  • Implement the estate planning tools best for your unique set of assets and wishes. 
  • Asset protection during litigation, as needed. No one likes to go to court, and family law an/or asset disputes are highly emotionally charged. We are experienced negotiators, and we aren't afraid to go to court if that's what it takes to provide you with the best results.

Develop a Strategy with a Palm Beach County Asset Protection Attorney

For more information on developing strategies for asset protection, contact a Comiter, Singer, Baseman and Braun Palm Beach County asset protection attorney either online or by calling us at 561-626-2101 or toll-free at 800-226-1484. We work with clients throughout the state of Florida. Initial consultations are free. 

For More Information Or To Schedule A Consultation,Reach Out To Us Online Or Call Us At 561-626-2101

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