Florida Asset Protection Blog

This Floridian's Annuity Proceeds May Not Be Creditor Protected

Annuities are exempt in Florida, and so are annuity proceeds. A client consulted with me today regarding assets which include a bank account, in his own name, which account contains $20,000 of annuity proceeds. There is no money in this bank account other than these annuity proceeds. Florida courts have protected annuity proceeds after they have been deposited in the debtor’s financial account as long as the money is traceable to an annuity. The annuity proceeds in this debtor’s bank account represent a final payment of an annuity purchased by his mother in New York for the debtor’s benefit. The debtor/son was the sole annuity beneficiary. The money is exempt, right? I thought so until I re-read the annuity statute. Now, I’m not so sure the money is protected from the son’s creditors.

Florida’s annuity statute, Section 222.14, exempts "the proceeds of annuity contracts issued to citizens or residents of the state, upon whatever form...." My client is a Florida resident and the only annuity beneficiary, but the annuity was not issued to my client. The annuity was issued to his mother who was a resident of New York. I don’t think the annuity qualifies for exemption under the statute because it was not issued to a resident of Florida, and therefore, I do not believe the annuity proceeds are exempt from the client’s creditors.

However, there is a 1996 court decision the Jacksonville Division of the Middle District of Florida wherein the bankruptcy judge disagreed with my interpretation of the statute. This judge found that the statute requires only that the "proceeds" of the annuity contract be issued to Florida residents. In re Allen, 203 B.R. 786.

Florida Residency For In-State Tuition: Rules Are Different

From time to time I receive questions about Florida residency for in-state tuition at Florida universities. Having college age children myself I looked into this issue several years ago. The residency rules for purposes of school tuition for undergraduate and graduate students under the age of 25 are significantly different from the law of residency for asset protection purposes. Just because a person is a Florida resident for purposes of asset exemptions does not mean the same person is a resident for purposes of in-state tuition. Florida has a separate set of rules for tuition residency. Florida’s rules are very similar to the in-state tuition tests in other states. School tuition is beyond the scope of this blog. Those interested in qualification for in-state tuition in Florida should examine those separate rules which are clearly stated on the websites of most Florida colleges and universities.

Florida Residency Issue

Florida residency is based on intent. A person is a Florida resident if and so long as he intends to make Florida his permanent home. I recently spoke with a client who wanted to know if he qualified for homestead protection as a Florida resident under the following fact situation. The client lived in Denver for 13 years where he was a company employee. The company relocated him to Florida. The client bought a home in Florida and moved into the home as his permanent residence. Six months later the employer relocated him back to Denver where he has been working for the past nine months. The client rents an apartment in Denver. He still owns his Florida house which is vacant. He keeps most of his furniture in Florida. The employer is paying his Florida mortgage. The client did not yet file a claim for homestead tax exemption. The employer does not know, and the client does not know, if an when he will be relocated in Florida, although the client would like to move back to Florida. The client has a Colorado drivers license and is not registered to vote in either Florida or Colorado. Some mail is addressed to Colorado, and other mail is addressed to Florida and forwarded to the current address in Colorado.

This is an example of a situation of uncertain residency. I do not think a court would find this person to be a resident of Florida, and I do not think the Florida house qualifies as a Florida homestead. Only people who establish Florida residency can claim homestead protection. This person’s residence is determined primarily by his employer, and the facts suggest that the person’s permanent residence is in Colorado with a brief work assignment in Florida. If a creditor recorded a judgment in Florida in the county where the home is located I believe the judgment would immediately attach to the Florida property.

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

Buying a Florida Residence Does Not Make Someone a Florida Resident

An attorney outside of Florida called me about his clients’ plan to protect assets by purchasing a home in Florida. The attorney anticipated that a judgment may be entered against the client within the next few months. The client owned and operated a real estate construction business in Arizona. Arizona is a community property state which has no tenants by entireties ownership for husband and wife. The attorney proposed that the client buy a house in Florida jointly with his wife after which he could protect the house and jointly owned financial assets, and most importantly, his construction business, as tenants by entireties property. The client would obtain a Florida drivers license and voter card.

I told the attorney that the house may be a protected tenants by entireties asset but that this judgment debtor could not protect his jointly owned personal property under the tenancy by entireties immunity.

This issue has been previously addressed on this Blog but warrants repetition. Exemption law for real property is generally based on the jurisdiction where the property is located. In this example, the jointly owned Florida residence would be deemed an entireties asset owned by non-residents. Exemption of personal property- property other than real estate- is based on the laws of the debtor’s residence. Purchasing a Florida residence is not the same as one being a Florida resident. Even though this prospective debtor would have a house, a drivers license, and voters registration in Florida there were not enough other facts that would make him a Florida resident eligible for protection of his personal property under Florida’s laws.

The debtor had no plans to abandon his primary business in his home state. He planned to have his children go to school in his home state, he would spend most of the work week in his home state at his company, his marital furniture would remain where it is, and he would receive most of his mail at his present address. A person is a Florida resident if his Florida residence is his primary residence, in other words, his “family home.” Purchase of a Florida property with not permanently moving to Florida is not a viable asset protection plan.

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