FLORIDA: HOME FOR ASSET PROTECTION AND
ESTATE PLANNING PURPOSES
Aside from warm weather, vibrant growth and business opportunities, Florida offers many benefits for its residents with respect to asset protection and estate planning. Florida maximizes protection opportunities and thus is an excellent location to call "home." Generally, an asset protection plan will consist of several layers of defense from potential creditors and will consider estate and tax planning considerations. Florida does not impose an estate tax or income tax on its residents.
In addition to the statutory homestead protection which reduces the amount of property taxes a Florida resident must pay and protects the resident from claims of creditors, Florida provides additional exemptions via statute, all of which are predicated on Florida residency. To establish residency, you may need to cut significant ties with your former state of residence and become domiciled in Florida. Establishing Florida residency includes obtaining a Florida driver's license, establishing a Florida bank account, changing your voter registration to Florida, joining civic/religious/philanthropic organizations in your local community, and, of course, filing for Florida homestead status, if you own your home. You should also file a "Declaration of Domicile" with the Clerk of the Circuit Court in your county of residence. Most importantly - you must spend most of the year in Florida. There are many nuances to this which we would be happy to discuss with you.
Florida's additional exemptions consist of the following:
1. Automobile Exemption: Up to $1,000.00 of equity in a vehicle is protected.
2. Salary or Wages: The head of household may protect his or her wages, earnings, or other compensation. If the compensation is due to personal labor or services, it will be exempt from
3. Life Insurance: The cash value of any life insurance policy is exempt from the claims of creditors. The death benefits received by a beneficiary are exempt from the insured's creditors, but not from
creditors of the beneficiary.
4. Annuities: Qualified annuities are protected from a creditor's attack. This protection extends to identifiable proceeds which are withdrawn from the annuity by the owner.
5. Disability Benefits: Generally, disability income benefits are exempt.
6. Prepaid College Plans: Any prepaid college plan, as well as Florida 529
7. Retirement Plans: Money payable to either a participant in, or a beneficiary of, a qualified retirement plan is exempt from creditors' claims. This exemption includes IRAs.
Please keep in mind, that a good asset protection plan may not necessarily make you entirely judgment proof, but it will give you leverage in negotiating settlements and possibly discouraging lawsuits against you.
I would be very happy to discuss asset protection planning, estate planning and the requirements for becoming a Florida resident and its benefits. I can also assist in directing you to other professionals and resources that may help you achieve your goals.
Our contact information is below. Should you have any questions please feel free to contact my office.
Admitted in Florida and New York
4400 PGA Boulevard, Suite 603 • Palm Beach Gardens, FL 33410-6561
Phone • 561.478.1588 Fax • 561.478.1566 / Email: [email protected]
If you are a permanent Florida resident, file your Florida Homestead Exemption by March 1, 2020, in order to take advantage of the 25k deduction from your property’s assessed value and 50k deduction if your property is worth at least 75k. “Save our Homes” caps any increase to the assessed value of a homestead exempt property to a maximum of 3% per year. This tax savings is transferable to a new Florida residence if you move. Not bad Florida!
There are plenty of good reasons to use a “land trust” under Florida Statute 689.071 in which real estate is held by a trustee who holds both legal and equitable title to the property. There are many reasons in holding property ( especially investment property) in a land trust and they include: the identity of the equitable owner remains private which is very attractive to high profile individuals; transfer of the property is relatively easy and cost effective; judgments against the beneficiary will not attach to the property and cloud title; an ancillary estate may be avoided, as the interest is deemed to be “personal property” and not real property; there is business and tax planning flexibility; and non-resident aliens can avoid U.S. gift and estate taxes if they hold their trust interest in a foreign holding entity.