The exemptions discussed below are privileges or rights granted by law to a debtor to enable him or her to retain a portion of his or her property free from judicial seizure and sale to satisfy the claims of the debtor’s creditors.  Effective use of these exemptions is at all time subject to the exceptions for fraudulent transfers and conversions.  The following discussion is a summary only.  If you would like more information about these creditor exemptions or asset protection methods, please contact us.

1.  Homestead.  With exceptions, a debtor’s homestead (i.e., his or her principal residence) will not be subject to creditors’ claims.  The homestead exemption protects up to 160 acres of land and all structures on that land, if the homestead is located outside a municipality, or up to one-half acre and the residence, if located within a municipality.  The exemption generally extends to the proceeds from the sale of a homestead or the proceeds of a homeowners’ insurance policy in the event the property is destroyed.  However, the homestead exemption does not shelter the homestead from the payment of taxes and assessments on the property or obligations in connection with the purchase, improvement, or repair of the property or residence, including any mortgages on the property.  Also, the homestead exemption is not available to shield against federal tax liens.

2.  Personal Property.  The personal property of a debtor, up to a value of $1,000, is exempt from the claims of creditors.  Exempt personal property may include cash, furnishings, or any other personal property.  As with the homestead exemption, the personal property exemption does not apply with respect to taxes, assessments, or purchase money liens on the property.

3.  Net Wages and Income.  All of the net earnings (i.e., wages, salary, commissions, or bonuses) of the head of a family, if less than $500 per week, are exempt from attachment or garnishment.  If net earnings of the head of a family exceed $500 per week, they are also exempt from attachment or garnishment, unless such person has agreed otherwise in writing.  Generally, not more than 25% of any person’s net earnings may be attached or garnished (except as relates to an obligation to support a former spouse or child or a debt for federal or state taxes).  In addition, exempt earnings that are deposited in a bank account continue to be exempt from attachment or garnishment for 6 months, provided they can be traced and properly identified as exempt earnings.

4.  Life Insurance.  The proceeds and cash surrender value of life insurance on the life of a Florida resident are exempt from the claims of the insured’s creditors and inure exclusively to the benefit of the designated beneficiaries.  However, if the insurance proceeds, by designation or otherwise, are payable to the insured, his or her estate, or his or her executors, administrators, or assigns, the insurance proceeds become a part of the insured’s estate for all purposes and become subject to the claims of the insured’s creditors.

5.  Annuities.  The proceeds of annuity contracts issued to a Florida resident are not liable to attachment, garnishment, or legal process in favor of any creditor of the person who is the beneficiary of the annuity contract.

6.  Disability Benefits.  Disability income benefits under any policy of life, health, accident, or other insurance are not liable to attachment, garnishment, or legal process in favor of any creditor of the recipient of such benefits.

7.  Retirement or Profit-Sharing Benefits.  Any money or other assets payable to a participant or beneficiary from, or any interest of any participant or beneficiary in, a qualified retirement or profit-sharing plan (including, for example, a traditional IRA or a Roth IRA) is exempt from all claims of creditors of the participant or beneficiary.  Two caveats are worth noting.  First, inherited IRAs may not be exempt from claims by the beneficiary’s creditors.  Second, in a bankruptcy proceeding, the exemption available for a non-rollover tradition or Roth IRA may be capped at $1 million (with increases for inflation). 

8.  Qualified Education and Health Accounts.  Moneys paid into or out of a 529 qualified tuition program (including the Florida Prepaid College Trust Fund) or an educational IRA, by or on behalf of an investor or qualified beneficiary, are not liable to attachment, garnishment, or legal process in favor of any creditor of the investor or beneficiary.  However, in a bankruptcy proceeding, only educational accounts for a descendant of the investor may be exempt, and perhaps only to the extent of contributions made at least one year before the proceeding.  Moneys paid into or out of a Health Savings Account or Medical Savings Account by or on behalf of a person depositing money into such account or a qualified beneficiary are not liable to attachment, garnishment, or legal process in the state in favor of any creditor of such person or beneficiary.

9.  Motor Vehicle.  A debtor’s interest in a single motor vehicle, not to exceed $1,000 in value, is exempt from attachment, garnishment, or other legal process.