Florida Asset Protection Blog

Motor Homes As Homestead

A client reports that he lives in a motor home. Most of the time he parks the motor home in a rented space in Florida, and for all other reasons, he maintains Florida as his residence. He neither owns nor rents any real property in Florida or anywhere else. He asked me whether the motor home qualifies as his homestead because it is the place where he resides with his spouse.

Motor homes are treated similarly to house boats under the majority of court decisions. My initial research indicates that the general rule is that if the motor vehicle or boat is licensed and operable then it is not sufficiently grounded to constitute a form of homestead property even if it is the debtor’s primary residence. Boats permanently attached to a dock or motor homes parked permanently have been afforded homestead protection. Court decisions addressing this issue vary in their analysis, and the particular facts of each motor home or houseboat are most important.

posted by Jonathan Alper, asset protection and bankruptcy attorney, Orlando, Florida.

Do You Have To Be A Florida Resident To Claim Florida Exemptions?

I would appreciate anyone’s thoughts on the following questions posed by a bankruptcy attorney in Kentucky. The attorney represented prospective bankruptcy debtors who moved to Kentucky from Florida within the past two years. Under the new bankruptcy law, they are ineligible to use Kentucky exemptions because they had not resided in that state for two years. The last state where they lived for two years was Florida. The attorney concluded that Florida exemptions would apply to his Kentucky case, except for one issue. He asked me whether a person has to be a resident of Florida to be eligible for Florida’s exemption under a Florida statute or the Florida constitution. If so, his clients, now Kentucky residents, could not use Florida exemptions and would file bankruptcy under federal default exemptions.

Only Florida residents can file bankruptcy in Florida. Any of my clients who filed bankruptcy, being Florida residents, were eligible for Florida exemptions in bankruptcy. I never have had to determine whether a person had to be a Florida resident to claim Florida exemptions because I never did, or could, file a bankruptcy in Florida for a non-resident. I cannot find any provision of the Florida statutes that specifically states that only Florida residents are protected by Florida’s exemptions. Clearly, only Florida residents can claim homestead protection of the Florida Constitution because the definition of homestead is one’s place of residence, and if your homestead is in Florida you are a resident of Florida.

I do not know the answer to the question facing the Kentucky attorney. If a reader knows authority that supports the position the person filing bankruptcy in Kentucky cannot take Florida exemptions and is under federal bankruptcy exemptions, please send me an email. Thanks.

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

Proceeds From Homestead Refinance

A email asked whether proceeds from the re-finance of homestead owned by husband and wife are protected from creditors under Florida law.. It depends what the owners do with the money. Assuming the homestead is owned jointly and net refinance monies is deposited in a joint checking account, then the money would be protected as tenants by entireties money from the creditors of either spouse individually, If the money was put in a financial account titled in the name of just one spouse and that spouse had judgment creditors, or if it were deposited a joint account and both spouses and both spouses had judgment creditors, the money would not be protected from creditors even if it came from the refinance of a homestead.

If refinance proceeds would be at risk if deposited in financial accounts, the homeowners should seek financial advice to invest the money in protected assets. For instance, the homeowners with creditor problems could use the net refinance proceeds to purchase an annuity contract for their own benefits. Annuities have broad protection under Florida law. Alternatively, the couple could invest some or all of unprotected proceeds in a 529 college plan. Because homestead properties are exempt assets the transfer of money from a homestead to a protected financial asset should not be reversible as a fraudulent asset conversion. If money is to be placed in a protected financial investment, such as an annuity or 529 plan, the homeowners should purchase the financial asset by money wire or check directly from the title company closing in order to avoid depositing funds, even for a short time, in a non-exempt bank account.

posted by Jonathan Alper, asset protection and estate planning attorney, Orlando Florida

Senate Report On Abusive Offshore Trusts

I occasionally get email questions about offshore trusts for people interested in sheltering income taxes. My reply always is that asset protection planning is income tax neutral, and that an asset protection plan is not designed to reduce taxes. Nevertheless, there are promoters and attorneys who market various plans to reduce income tax involving one or more offshore legal entity. There is a well know website called Quatloos.com which reports on tax evasion scams and the prosecution of their promoters. In a November 1, 2006, post Quatloos includes a report on offshore tax havens written by the U.S. Senate committee investigating income tax scams.

The Senate report is lengthy but very interesting. Anyone who is thinking of involvment in an offshore legal structure promising to reduce income tax should read portions of the Senate report. The report is very detailed in its description of abusive offshore tax schemes, and it names the promoters and attorneys responsible. The Senate Report can be seen at:
http://www.quatloos.com/tax_haven_abuses.pdf

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

Is Parent Liable For Accidents of His Adult Child?

No matter how much I think I know about asset protection there is always some new risk of liability that surprises me. A client called me about his car insurance. The client had a child in college in another state. The child had a drivers license in the other state and not in Florida. The same child owned a car in the child’s own name. The child had his own car insurance with minimum liability coverage as the parent/client believed liability coverage was not important for a child with no assets. The client’s insurance agent said that his own $1m umbrella policy would not cover him unless the child raised his insurance liability limits or the child were insured under the parent’s own policy with high liability limits. This seemed illogical because the child was an adult and his ownership and operation of the car was in a totally different part of the country.

I checked the issue with two insurance agents I know in Orlando. Both told me that there is established legal decisions which can make a parent liable for the accidents of his adult child as long as the child is a legal dependent and is claimed as a tax dependent on the parent’s tax return. So, even if you are not on the title to your child’s car, and the child had his own insurance, you still could be liable for his accidents if he is your legal dependant.

Both insurance agents said that the client should raise the liability limits on his child’s separate insurance to match the parents’ liability levels in order to bring the child under the parents’ umbrella liability policy. Not knowing anything about insurance laws, I was very surprised to find another example of how creative plaintiff’s attorneys are able to convince judges to make tap into deep pocket defendants.

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