Florida Asset Protection Laws
As a business owner, it’s important to be aware of Florida asset protection laws. Here’s what you need to know.
Understanding the Role of Florida Asset Protection Laws
Asset protection is a legal procedure by which a debtor structures his or her assets in a manner that makes it less likely for a present or future creditor to collect on them. In the state of Florida, this procedure is regulated under Florida asset protection laws, which are outlined in the Florida Constitution as well as the state’s common law and statutes.
A substantial portion of individuals looking for asset protection assistance are business owners. This most commonly happens when the business owner’s creditors have filed a claim against the business in addition to the owner themselves, who might have signed personal business debt guarantees.
The successful attack of a creditor upon the business’s assets can deny the owner of current income and future wealth. Therefore, if your business is facing litigation from a creditor, taking immediate action is essential. Whether you’re in this situation currently or you want to learn about your asset protection options in preparation for the future, The Turning Group’s bankruptcy alternative specialists can help you build a strong asset protection plan to protect not only your business, but also your livelihood.
What Business Owners Should Know About Florida Asset Protection Law
The laws regulating a business’ asset protection have key differences from asset protection law for individuals. While individuals in Florida are eligible to protect their most important assets through the exemptions under Florida statutes, Florida asset protection law provides business entities no exemptions from judgment creditors.
The core of any successful business entity is its continuous operation, including its production or provision of products or services to its clients, monetary negotiations with suppliers and creditors, and marketing to potential consumers. Most of the prospective legal liability of a business is connected with this core business, and legal action is most likely to emerge out of financial transactions or from business interactions with suppliers, clients, or customers.
A business’ assets are at greatest risk if they are owned by the same legal entity that runs the core business. This is due to the fact that a judgment against that entity will jeopardize the same assets and therefore threaten the operation of the business.
Florida business asset protection begins by separating the ownership of important assets from the core business operations that are prone to litigation. Because of this, there are two different areas of asset protection law that may apply to a business owner: business asset protection and personal asset protection. The way these apply to your situation will depend on the way your business and its assets are structured.
Application of State of Florida Asset Protection Laws for Businesses
Business asset protection usually involves structuring the business’ assets to make it harder for a financial institution with a judgment to collect on the assets. This type of asset protection is most relevant for business owners who operate their business through a separate legal entity such as a corporation, limited liability company, and limited partnership instead of as a sole proprietorship. State of Florida asset protection laws set the guidelines for each of these entities and assign each with unique legal characteristics, tax attributes, and operation formalities.
Without any exemptions that can be applied to business entities, all of an organization’s possessions are in danger if a financial institution acquires a judgment against a business. Potential risks include:
- Automatic liens on real property.
- Garnishment of a business’ bank account in addition to other financial obligations.
- Levies upon the business’s leases, thus denying access to facilities and vehicles.
- Execution and levy of essential intangible property such as patents, software, or computer codes.
Loss or damage to any of the above assets can be devastating to a business. However, a Florida asset protection attorney can help you determine which course of action will best help you protect your business assets.
Exempt Personal Assets Under Florida Asset Protection Statutes
Under Florida asset protection statutes, Florida residents qualify for unique protections in which numerous assets are exempt from creditors. These include:
- Homestead property of up to 160 acres, with exceptions based upon the size of the homestead and the judgment debt’s nature. Known as the Florida Homestead Exemption, this homestead protection law ensures that the primary residence is exempt from forced sale under court procedure and thus protected from creditors.
- The head of household’s wages.
- Disability income, worker’s compensation, and unemployment benefits.
- Social security.
- Life insurance policies.
- Retirement accounts such as an Individual Retirement Account or 401k.
- Prepaid collect plans.
- Tenants by entireties property when the judgment is separate. This means that assets owned jointly by a married couple are protected from creditors of either spouse when only one spouse is the debtor.
- Interest in a multi-member LLC with a correctly-composed LLC Operating Agreement (this is still subject to a charging lien).
- $1,000 of vehicle value.
- $1,000 of the cash value of personal property (or $4,000 if you do not own a house).
- Health aids and medical savings accounts.
- The interest and inheritance of beneficiaries in properly-drafted estate planning trusts.
As a business owner, Florida’s personal asset protection laws usually won’t apply in regards to your business. However, if you have not structured your business to protect assets you own individually, your non-exempt personal assets may be at risk.
Limited partnerships and limited liability companies are often utilized for business asset protection. When you consult with The Turning Group, we’ll guide you through your options regarding the structure of your business to protect both your business and personal assets from creditors.
Consult Our Florida Asset Protection Specialists
When it comes to businesses, good asset protection is often more intricate and challenging than personal asset protection.
While there are tools available to protect a company’s most important properties, such preparation should be carried out early, attentively, and correctly to prevent accusations of a fraudulent transfer. Additionally, Florida asset protection could have impacts on tax planning and the way each business owner makes decisions for income tax purposes. With all of this in mind, business asset protection planning is most effective when done with the help of a skilled asset protection lawyer.
At The Turning Group, we’re dedicated to guiding Florida business owners through each step of the asset protection process, and we’d like to help you, too. This begins with a thorough evaluation of your assets and identifying what is in danger of collection from a judgment lender. We then use this information to build a comprehensive asset protection strategy to protect any vulnerable assets from collection.
The skills of a well-rounded attorney who can provide additional services like a business appraisal can be especially beneficial if your business is struggling. When you meet with us, we’ll help you explore all available options to secure your business’ success, such as a liquidation valuation followed by a business liquidation auction. If you’re ready to begin protecting what matters most, contact us today to schedule a consultation. We look forward to assisting you!
If your business is facing bankruptcy proceedings, The Turning Group can help you find a solution to keep you on your feet. Based in Doral, Florida in the Greater Miami Area, we offer comprehensive bankruptcy alternative and liquidation services to clients throughout the state of Florida. Contact us today at 305-640-5754 or fill out the form below so we can begin to steer you toward success.