The laws of asset protection in Florida are considered some of the best in the country, thanks to generous creditor exemption laws.
These protections can allow your Florida real estate to become an effective shield for wealth at risk of creditors.
However, if you don’t plan asset protection in Florida correctly, you could see yourself facing severe long-term consequences.
In this blog, we’re going to explain how to title real estate for asset protection in Florida. Remember, this should be used as an introduction to the topic – you should always consult a Florida real estate attorney before making important decisions.
What Is Asset Protection in Florida?
Asset protection describes the legal process where a debtor structures their assets so that it is extremely difficult or impossible for creditors to collect on those assets.
Asset protection in Florida can be utilized at any stage of debt – in most cases, it is never too late. It may even be a viable option after a lawsuit is filed or after a judgment is entered.
However, planning is always the best thing to do. With the help of a Florida real estate attorney, you can gain security and peace of mind.
Do I Need Asset Protection in Florida?
Anyone who holds assets in today’s world should consider some type of asset protection. In Florida, if a judgment is entered against you, then a creditor can begin to collect on the judgment.
Titling Real Estate for Asset Protection in Florida
Asset protection is a broad term that covers a variety of legal strategies. But we’re focusing on titling real estate.
4 Common Ways to Title Real Estate for Asset Protection
Real estate assets are commonly acquired and title held in four structures:
- Individual Name
- Multiple Parties Names: Marriage, Domestic Partnerships, General Partnerships, Joint Ventures
- Entities, including corporations, LLCs and Limited Partnerships
Individual Name Titling
Unless the real property is your homestead, you will most likely face unnecessary liability by owning real property in your name. Even raw landowners face cases due to injuries of trespassers.
Personal residences, however, allow for extra protection under Florida state law – so titling in your individual name may be beneficial.
Florida’s Homestead Act means creditors cannot force a sale or place an involuntary lien on a Florida homestead. This makes it one of the simplest and most effective ways to title real estate for asset protection in Florida.
Florida’s homestead law is also uncapped. Even an extremely valuable Florida homestead can survive a bankruptcy case intact. There may be additional strategies you can deploy on top of this too – such as transferring wealth into a homestead to maximize asset protection.
How to Take Title by Individual Name:
To take advantage of this asset protection strategy, the property must qualify as a ‘homestead’ under Florida law – it must be your primary residence.
Additionally, only ‘natural persons’ are protected by the law. So you can’t title your residence to a corporation or LLC and expect homestead protection.
Note, however, that there are still some limitations to this form of asset protection in Florida. Mortgages, HOA liens, tax liens and mechanic’s liens fall outside of the law’s protection.
It can also prove to be a double-edged sword in estate planning, as it can limit the extent to which others can be protected by the homestead.
If you are considering this an asset protection strategy, always consult a Florida real estate attorney first for expert advice relevant to your circumstances.
Multiple Parties Names
Titling real estate jointly with a spouse can bring protection all by itself. Unlike individual titling, you aren’t restricted to residential properties like with the homestead law.
One form of joint ownership under Florida law is ‘tenancy in the entireties’. This law protects against creditors for spouses who co-own real estate.
How to Title By Multiple Names:
To take advantage of this type of asset protection in Florida, the real estate must be jointly owned by a married couple, who both have joint control of the asset and hold the same ownership interests. The property must also have been purchased by the couple via the same deed, during their marriage.
If the land is held in tenancy by the entities, creditors cannot attach the land to cover debts – unless the debt is owed by both spouses.
For example, if one spouse has significant premarital debts that are unrelated to the other spouse, then titling the property to both spouses can protect the asset from creditors.
This method is also beneficial because it isn’t just limited to homesteads. A couple could own an investment property or rental home, with the same protections. It can also be a very useful way to avoid probate.
Tenancy by the entireties has its downsides too, however. For example, the first spouse to die will lose the ability to transfer interest in the property to anyone other than their surviving spouse. This can have a big impact on inheritances and is an example of why you should always consult a Florida real estate attorney before making any titling decisions.
You may also be able to title real estate for asset protection in Florida through entities such as an LLC. LLCs can be beneficial because the LLC limits the liability of an individual.
In most cases, corporations are not the best idea for titling real property in Florida, because of the plethora of tax laws.
Limited partnerships can also be used, but an LLC may be the wiser option due to the lower costs.
As always, ensure you contact a Florida real estate attorney for expert advice relevant to your situation.
Revocable, Irrevocable and Land Trusts can be great asset protection tools, but may not be suitable for all.
A revocable trust for example can be effective at protecting assets for your beneficiaries, but not for you as an individual, as it’s revocable. The solution may be to set up a Trust in combination with an LLC.
Irrevocable trusts can be equally as effective, especially when protecting assets such as banking and financial accounts.
Contact a Real Estate Attorney in Florida for Asset Protection
If you’re looking to title real estate for asset protection in St Petersburg, Florida then contact us today.
Our attorneys, Howard Ross, Andrew Pardun and Robert Kapusta at Battaglia, Ross, Dicus & McQuaid, P.A. have extensive experience and will review your circumstances and provide advice on which asset protection route is best for you; before helping guide you through the process, in line with the law.
Contact us today to schedule a free consultation.