Random Interesting Questions

Much of my typical day is spent answering interesting questions from clients and callers. Here are a few that were presented today:

Question: If a debtor owns a life insurance policy on his own life payable to his wife upon death, can a creditor of the debtor get the insurance proceeds upon his death. The answer is no. The life insurance death benefits become property of the non-debtor spouse upon the debtor’s death. If the debtor made his estate the beneficiary, or if he failed to designate any beneficiary, then his creditors could attach the death benefit when he died.

Question: if a federal bankruptcy court, or any other federal court, issues a judgment against a Florida debtor other than the debtor filing bankruptcy is the judgment debtor’s Florida homestead still protected? In other words, does Florida’s homestead protection afforded by state law protect against a judgment of a federal court as well as a state court? The answer is yes. Homestead protection does not distinguish the source of the judgment. Although some federal actions, such as IRS collections or criminal actions can impair homestead protection, civil money judgments from federal or state courts cannot be enforced against the debtor’s homestead.

Question: Inasmuch as a Florida homestead cannot be devised to anyone other than a surviving spouse or minor child, can a single spouse who owns the family homestead in his own name transfer or encumber the homestead during his lifetime. The answer is no, unless the spouse joins in the conveyance. The spouse has a legal interest in her homestead even if she is not on title. Minor children do not have to waive their potential homestead interest because, as minors, they are unable to waive their own rights and they are represented by their parent guardians.

posted by Jonathan Alper, asset protection and bankruptcy lawyer, Orlando, Florida