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Which Assets are Protected from Creditors Under Florida Law?

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One of the goals of an estate planning attorney is to make sure his clients’ assets are protected. And, to be sure, one of the most important assets a person has is their retirement account. Unfortunately, these accounts are often the target of creditors, but luckily, many types of retirement accounts are protected by creditors from state and federal laws.

In Florida, there are strong policies that attempt to protect retirement plans to keep debtors from becoming dependent on state assistance if a creditor leaves them without the means to support themselves after they retire. In 2011, Florida statutes were expanded to include both inherited IRAs and rollover IRA accounts and that protection takes precedence over a U.S. Supreme Court ruling that stated that inherited IRAs aren’t exempt under bankruptcy laws.

Qualified Retirement Plans 

The most common type of protected retirement account is a qualified retirement plan. These plans are protected under the federal ERISA law. ERISA protects accounts including traditional pension plans like 401(k) and 403(b) plans. These plans are typically exempt from bankruptcy and civil court judgements. Rollover IRA accounts are usually protected as well, regardless of the state that they were created in.

Because Florida opted out of the federal bankruptcy exemptions, there are limits on residents who file bankruptcy. Florida’s legislative limits allow those who file bankruptcy to only claim state law exemptions. Fortunately, state law exemptions in Florida are very generous when it comes to retirement accounts. Under Florida law, both Roth IRAs and traditional IRAs are fully protected from creditors in civil judgements and bankruptcy cases.

Simple Employee Pension IRA Accounts 

Another form of retirement account that is protected is called a simple employee pension IRA or SEP-IRA. These are a variation of IRAs used in the U.S., and are used by business owners who want to provide benefits to their employees and owners. These accounts are protected under federal laws for bankruptcy, but some courts have disagreed whether states should be allowed to exempt SEP-IRAs from civil court judgements.

According to the state of Florida, SEP-IRAs are protected from creditors. The Florida statute says that any assets or money that is payable to a beneficiary or participant in a profit sharing plan or qualified retirement account should be exempt from creditor claims. The statute also protects umbrella type pension plans for teachers, county employees and officers, state employees and officers, firefighters, and police officers.

After Your Death 

It is important to keep in mind that although the state of Florida protects IRAs from creditors, this doesn’t mean that your IRA or other retirement account will be protected after your death. The best way to be sure that your assets are protected after you die is to have a trust as the beneficiary

Contact an Asset Protection Attorney Today 

It is never a good idea to wait until a crisis strikes to plan asset protection. By then, it is often too late to take the appropriate measures needed to protect your assets. Because none of us know what the future will bring, it is important to start planning how to protect your assets today. Contact David Toback, Attorney at Law in Tampa today and schedule a consult to start protecting your assets before it is too late.

Resources:

leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=0200-0299/0222/0222.html

leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0200-0299/0222/Sections/0222.201.html

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