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Florida Asset Protection

Tenancy Rights

Florida Homestead

The Florida homestead exemption is mandated by state Constitution. The dollar value exemption is unlimited. The exemption is limited to a half acre tract within a city and one hundred and sixty contiguous acres, elsewhere. Property held in tenancy by the entirety may be exempt against debts owed by one spouse. The US Court of Appeals recently held that the exemption will apply even if the owner acquired the property or enlarged it, with the intent to defraud creditors.

To Qualify

• You must be a resident of Florida
• The property must be inhabited.  Property purchased as a future residence is unprotected until the property is occupied as a principal residence.
• Only "natural persons" quailfy for homestead protection so properties titled in the name of irrevocable trusts, corporations, limited liability companies, or partnerships will not qualify. 
• Condominiums, manufactured homes, and mobile homes are also qualify for the homestead protection.
• Property owned by a living trust can be homestead property.
• Property owned by a land trust qualifies for homestead protection.
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Not Qualified

• Protection of property from tax liens, home owners associations, mechanical liens for labor and material repair to improve the property
• Mortgage default
• Bankruptcy – up to $137,000 unless the debtor occupied his property up to 40 months ($274,000 for Joint Tenancy)

What makes Florida Homestead Protection so unique and valuable is that there is no limits to the monetary protection limit.  Florida residents can protect unlimited amounts of dollars in their estate, homes and farms and protect the entire value invested.  Under a Florida Supreme Court ruling, a person can transfer unprotected, non-exempt assets to his homestead at any time by either buying a new home or reducing the principal balance of an existing mortgage and protect this money under the homestead umbrella, even if the asset transfer was clearly designed to hide money from creditor claims.

There are limited exceptions to this general rule pertaining to money obtained by deceit, fraud, or other egregious means. Transfers of cash into homestead within 10 years intended to defraud creditors may be challenged by the bankruptcy trustee. 

Joint Ownership JTWROS

First off, this is not a method of asset protection.  Joint tenants with rights of survivorship provide additional protection in the case of married couples jointly owning property.  upon the death of one of the spouse, the ownership is vested by law to the surviving spouse.  A creditor of either spouse can seize the interest in the debtor spouse holding property interest.

Tenants by Entirety TE

Tenants by Entireties ownership may provide some asset protection benefits.  This is available only to married persons and  has been established in Florida by case precedence.  The precedence has been set judicially with the following characteristics.

• Joint Ownership
• Joint Control
• The parties were married at the time they acquired the property.
• The property must transfer to the surviving spouse if one of the spouses dies.
•  The interest must have originated in the same instrument,
•  The interest must have commenced simultaneously

It should be noted that if both tenants are indebted to a creditor, that creditor can seize tenants by entireties property.  Rights of protection are terminated by divorce.  If both spouses own the same business, TE is a risky means of asset protection since a creditor must have a claim to both spouses. Tenants by entireties protection exists only if a creditor has a claim against only one of the spousal owners.

In Florida, TE is afforded to all types of property, real property, tangible and intangible property as long as it is owned by a married couple.  The Florida Supreme Court has ruled that real and personal property owned by JTWROS is also TE.  The factors in the above lists are critical for protection in Florida.  Each and everyone must be met to protect the property.

 If one spouse dies the property is no longer protected by TE.  Once the property is owned by the surviving spouse, the protection ceases.  It is important to consider an entire estate plan.  TE may not provide any tax benefits.

In Florida, tenants by entireties is the quickest and simplest asset protection for married persons. This form of ownership, however, may not provide secure asset protection over the long term. First, a divorce between the spouses immediately converts the tenants by entireties into a joint tenancy between the former spouses. In that case, the assets of the debtor spouse would immediately be exposed his or her creditors. Likewise, a death of one spouse terminates the tenants by entireties and vests the property solely in the surviving spouse. If the surviving spouse has creditors, the asset protection afforded by the tenants by entireties ownership is lost. Secondly, tenants by entireties ownership creates problems for estate planning and interferes with estate tax avoidance.