What Assets Are Protected in a Lawsuit in Florida? Florida Asset Protection Planning

The assets protected under a lawsuit in Florida are:

• Primary residence (homestead) for property in Florida 
• Retirement accounts
• Life insurance policies and annuities
• Tenancy by the entireties (for married couples)
• Wages and head of household exemptions

We will dive into these in more detail, but know that Florida law provides protection for various personal assets from creditors and lawsuits, helping individuals preserve their wealth even during financial challenges. Individuals can protect their property, financial accounts, and personal assets against potential claims by implementing asset protection strategies. 

The Florida Constitution and state statutes are central to these protections, offering extensive exemptions, particularly for homesteads and retirement accounts. At our law firm, we guide clients through asset protection planning, ensuring each client has the necessary measures in place to secure their assets.

With our knowledge of Florida asset protection laws, we can offer personalized advice and effective strategies to help safeguard your financial future.

To get effective asset protection planning, our Tampa commercial litigation lawyers are available to ensure your personal assets are protected from your business activities.

What Assets Are Protected From Creditors in Florida?

These protected assets ensure that residents maintain a degree of financial security, even if their business is struggling during difficult times.

Below are key assets that Florida law protects from creditors.

Is Your Home Protected in a Lawsuit in Florida? 

Yes, your primary home is generally protected from creditors in Florida, thanks to the state’s homestead exemption. This exemption shields primary residences from forced sale in most lawsuits, defending homeowners from financial loss due to creditor claims and ensuring that individuals have a stable place to live, even during hardships.

The homestead exemption in Florida for residents of Florida is a legal provision protecting the equity in an individual’s primary residence. Under this exemption, a primary residence is protected from forced sale by creditors as long as it meets specific criteria.

The exemption applies to properties up to half an acre in urban areas and 160 acres in rural areas. This protection covers only the property where the owner resides as their main home, so vacation or secondary homes do not qualify.

While Florida’s homestead exemption shields primary residences from most creditor claims, there are exceptions.

Federal debts, such as tax liens and mortgages (including HOA and condominium association assessments), are not covered. This means that while private creditors cannot force a sale to satisfy judgments, debts tied to the property, like unpaid taxes or mortgages, still affect the home.

How Safe Are Your Retirement Accounts from Lawsuits? 

In Florida, retirement accounts generally receive strong protection under asset protection laws, helping residents safeguard retirement savings from creditors and legal judgments. These protections are essential for individuals seeking to protect their long-term financial stability.

Below, we discuss which retirement accounts are safeguarded, the extent of this protection, and any exceptions.

Protected Retirement Accounts in Florida

Most tax-deferred accounts such as 401(k) plans, traditional and Roth IRAs, pension plans, and 403(b) accounts are protected from creditors under Florida law. For instance, 401(k) plans receive protection due to the Employee Retirement Income Security Act (ERISA), which shields these accounts from judgment creditors.

Since Florida laws offer favorable protection plans, residents can benefit from these strong protections to ensure their assets remain secure.

Rollover and Inherited IRAs

In Florida, rollover IRAs are protected similarly to traditional IRAs, as long as they maintain their tax-deferred status and are directly transferred from another protected account like a 401(k). However, inherited IRAs are not afforded the same level of protection and may be vulnerable to creditors.

Learning more about this distinction is vital in asset protection planning, as it can impact how inheritance is structured to maximize protection.

Specific Rules and Exceptions

While Florida’s asset protection laws broadly safeguard retirement accounts from creditors, certain federal debts, such as tax liens, may still affect these accounts. Moreover, retirement assets used as collateral in loans or for fraudulent transfers may not be fully protected.

In cases involving family law, such as divorce settlements, retirement assets may be divided depending on the court’s orders, affecting protection from creditors.

Are Your Life Insurance and Annuities Safe from Creditors?

In Florida, life insurance policies and annuities receive significant protection from creditors, safeguarding both the cash value and death benefits in most cases. This means that beneficiaries, like spouses or children, can typically access policy proceeds without concern of creditor claims.

The cash value of life insurance policies is generally protected under state law, provided the beneficiary is a close family member, like a spouse, child, or other dependent. Similarly, annuity contracts are shielded from creditors, allowing for greater asset security.

However, these laws in Florida may not apply in fraud cases or if the beneficiary is an unrelated third party.

Tenancy by the Entireties (for married couples)

In Florida, tenancy by the entireties (TBE)is a form of joint ownership that protects assets jointly owned by married couples from creditors who pursue only one spouse individually.

This means if one spouse faces creditor claims, assets held under TBE, such as real estate, bank accounts, and other personal property, are generally shielded.

For TBE protection to apply, assets must be jointly owned and acquired during the marriage, with both spouses maintaining equal rights. This form of ownership offers Florida couples a strategic asset protection tool, preserving jointly held assets from individual creditor actions.

Wages and Head of Household Exemptions

In Florida, the head of household exemption protects a portion of an individual’s wages from garnishment by creditors. This exemption primarily benefits individuals who support dependents, such as a spouse or children, and can shield up to 100% of wages if the individual earns less than $750 per week.

Up to 25% of disposable income may be garnished for those earning more than $750 per week, but only if the head of household has signed a written waiver.

Florida’s wage protection laws offer some of the most extensive safeguards in the country, helping protect the primary income for those supporting their families from creditor claims.

What Other Assets Can You Protect from Creditors? 

In Florida, several miscellaneous assets are protected from creditor claims, offering individuals additional financial security:

• Disability Benefits: Monthly disability payments are generally exempt from creditor claims, providing continuous support for individuals with disabilities.
• Veterans’ Benefits: Veterans’ benefits are protected under both federal and state law, ensuring that funds for veterans’ care and support remain safe from creditors.
• Medical Savings Accounts: Health Savings Accounts (HSAs) and similar medical savings plans receive protection in Florida, safeguarding funds set aside for medical expenses from creditor action.
• Personal Property: Florida allows exemptions for specific personal property, including clothing, household items, and tools of the trade, up to a limited dollar amount (usually $1,000 for individuals or $4,000 for individuals not claiming homestead exemption).

For tailored guidance related to your personal assets, contact our experienced lawyers today to book your initial consultation

Florida Asset Protection Laws You Need to Be Aware Of

Here’s an overview of the relevant Florida asset protection laws and statutes:

Homestead Exemption – Florida Constitution, Article X, Section 4

• Florida Constitution, Article X, Section 4 protects a primary residence from forced sale by creditors, with limits on the property size (up to half an acre in a municipality or up to 160 acres outside one).
• The homestead exemption safeguards homeowners from losing their primary residence to creditors, though exceptions apply (e.g., mortgage foreclosure, mechanic’s lien, or unpaid property taxes).

Tenancy by the Entirety – Florida Common Law

• Although not governed by a specific statute, tenancy by the entirety is recognized in Florida common law as a joint property ownership type for married couples. Florida courts uphold this as an asset protection strategy, shielding jointly held assets from creditors of an individual spouse.
• Certain statutes, like Section 655.79 of the Florida Statutes, support this by presuming a tenancy by the entirety ownership for joint bank accounts opened by married couples.

Retirement Accounts – Florida Statute § 222.21

• Florida Statute § 222.21 protects certain retirement funds, including IRAs, Roth IRAs, 401(k)s, and other retirement accounts that are compliant with ERISA (Employee Retirement Income Security Act).
• Florida law aligns with federal ERISA protections, ensuring that qualified retirement funds are generally exempt from creditor claims, with few exceptions.

Life Insurance and Annuities – Florida Statutes §§ 222.13 and 222.14

• Section 222.13 protects life insurance proceeds payable to beneficiaries from creditors, while Section 222.14 exempts the cash value and proceeds of life insurance and annuity contracts from creditor claims.
• These statutes ensure that both the policy’s cash value and death benefits are safeguarded from creditors, offering financial security for beneficiaries.

Wages and Earnings – Florida Statute § 222.11

• Florida law protects the wages of a “head of family” from garnishment if they earn below a certain threshold (currently around $750 per week) or if wages are deposited into a separate bank account.
• This statute applies specifically to garnishment protections, limiting creditors’ access to the earnings of individuals who support their families.

529 College Savings Plans – Florida Statute § 222.22

• Section 222.22 protects funds in qualified tuition programs, such as 529 plans, from creditors. The statute specifies that funds earmarked for educational purposes in these accounts are generally protected from creditors.

Each of these protections has specific limitations and conditions, so consulting with our experienced attorneys can help you structure your assets to fully benefit from these laws.

Can Forming an LLC or Trust Help You Protect Your Personal Assets?

Yes, creating a limited liability company (LLC) or establishing a trust can be effective strategies within a comprehensive asset protection plan to help protect assets from creditor claims or legal judgments in Florida.

How an LLC Offers Additional Protection

An LLC helps protect personal assets by creating a distinct legal entity for business activities. When structured correctly, an LLC shields personal assets—like your home and bank accounts—from liability in lawsuits against the business.

This is particularly beneficial in business liability cases, as it limits creditors’ access to assets only within the LLC itself, rather than reaching personal property. Florida’s favorable asset protection laws enhance this separation, helping business owners maintain financial security while operating under an LLC.

How Trusts Can Protect Personal Assets

Trustsallow assets like real estate, investment accounts, and family wealth to be held in the name of the trust rather than in an individual’s name. An asset protection trust can safeguard assets from certain creditor claims by distancing the assets from personal ownership, especially if the trust is structured as an irrevocable trust.

This means assets placed in the trust are no longer directly owned by the individual, protecting them in the event of a lawsuit. Proper asset protection planning in Florida with a trust can secure assets for future generations or specific family needs. 

The dual approach of LLC and trust protection strengthens the separation of personal and business liabilities and offers greater security against creditor actions, ensuring that both types of assets are safeguarded under Florida law.

Our experienced attorneys at Four Rivers Law Firm offer customized guidance in asset protection planning. We help clients select and structure LLCs and trusts that best suit their needs. 

Additional reading: what are the elements of a copyright infringement claim

Contact Our Business Attorney For Asset Protection in Florida

Florida’s asset protection laws offer powerful tools for safeguarding personal wealth, including the Florida homestead exemption, retirement account protections, and asset protection strategies for life insurance and annuities.

These laws are designed to protect your assets from judgments, lawsuits, and creditor claims, ensuring your assets in Florida remain secure and shielded from financial risk.

Taking a proactive approach to asset protection planning is essential. Individuals can effectively separate personal and business assets by implementing an asset protection plan, such as establishing LLCs, trusts, or asset transfers where permitted under Florida law, reducing exposure to potential claims. 

Our firm specializes in Florida asset protection planning, offering strategies that align with Florida statutes to create robust protection tailored to your unique situation. We can help safeguard your assets by developing a personalized asset protection plan that accounts for creditor protections and state exemptions.

Contact us today at 813-773-5105 to schedule a consultation and get protected in Florida.