Florida offers some of the strongest protections for debtors in the United States. The framework is layered: constitutional protections at the top, statutory exemptions under Chapter 222, and common law protections like tenancy by the entireties. For certain asset categories, Florida is unmatched.
However, Florida asset protection statutes have notable gaps. The state has no domestic asset protection trust legislation, single-member LLCs lack meaningful creditor protection, and self-settled trusts offer no shelter from your own creditors. Understanding both the strengths and limitations is essential for comprehensive planning.
Constitutional Protections: The Homestead Exemption
Article X, Section 4 of the Florida Constitution protects a primary residence from forced sale by judgment creditors. This is arguably the most powerful homestead protection in the country because it has no dollar cap. A Florida resident can own a multi-million dollar home and protect the entire value from civil creditors.
The protection is limited by acreage rather than value: one-half acre within a municipality or 160 acres outside municipal boundaries. To qualify, you must be a permanent Florida resident and actually occupy the property as your primary residence.
Florida courts have interpreted homestead protection uniquely. In most states, converting non-exempt assets to exempt status shortly before a creditor claim arises can be challenged as a fraudulent transfer. Florida takes a different approach. A Florida resident can generally convert unprotected assets into homestead equity at any time, even after a lawsuit has been filed. There is an exception for money obtained through fraud, but the general rule favors the debtor.
Statutory Exemptions Under Chapter 222
Florida Statute Chapter 222 provides additional exemptions that offer significant shelter.
Retirement accounts receive unlimited protection under Section 222.21. IRAs, 401(k)s, 403(b)s, and pension plans are fully exempt from creditors, including inherited IRAs and rollover accounts. Unlike some states that cap retirement account protection, Florida imposes no dollar limit.
Life insurance and annuities are protected under Sections 222.13 and 222.14. The cash surrender value of a life insurance policy on your own life is exempt, as are all annuities and annuity proceeds. Florida courts have interpreted these exemptions broadly, making annuities a popular vehicle for asset protection. The protection continues after you receive payments, so long as the funds remain traceable.
Wage protection under Section 222.11 is substantial for heads of household. If you provide more than half the support for a dependent, all disposable earnings up to $750 per week are fully exempt from garnishment. Those who do not qualify as head of household are subject to federal garnishment limits.
Tenancy by the Entireties
Florida recognizes tenancy by the entireties, a form of joint ownership available only to married couples. Assets held this way are immune from the creditors of just one spouse. This applies to both real property and personal property, including bank accounts and investment accounts.
The protection continues as long as the marriage continues. However, it does not protect against joint creditors who have claims against both spouses. Additionally, transferring property into a trust typically destroys the protection.
LLC Protections: A Critical Distinction
Florida’s LLC statute draws a sharp distinction between multi-member and single-member entities.
For multi-member LLCs, Section 605.0503 provides that a charging order is the sole and exclusive remedy for a judgment creditor. The creditor cannot foreclose on the membership interest or force sale of LLC assets.
Single-member LLCs receive far weaker protection. In 2010, the Florida Supreme Court ruled in Olmstead v. FTC that the charging order is not the exclusive remedy against a single-member LLC. Creditors can petition for foreclosure and sale of the membership interest if a charging order will not satisfy the judgment within a reasonable time.
This is a significant gap compared to states like Wyoming, Nevada, and Delaware, which protect single-member LLCs with exclusive charging order provisions. Florida residents who want LLC protection for assets held individually must either add a second member, use a limited partnership, or form an LLC in a state with stronger protections.
What Florida Does Not Have: The DAPT Gap
Perhaps the most significant limitation is the absence of domestic asset protection trust legislation. Florida does not permit self-settled asset protection trusts. If you create a trust in Florida and name yourself as a beneficiary, your creditors can reach those assets.
Florida residents can establish DAPTs in states like Wyoming, Nevada, or South Dakota. However, this raises a conflict of laws question: if a Florida creditor sues, will the court apply Florida law or the law of the state where the trust was formed?
To strengthen an out-of-state DAPT, Florida residents should use a trustee located in the DAPT state, hold assets that can be located there rather than in Florida, and ensure that trust administration occurs in the DAPT state.
Practical Considerations for Florida Residents
Florida’s exemptions protect certain categories extremely well. If your wealth is concentrated in your primary residence, retirement accounts, life insurance, annuities, and assets held jointly with a spouse, Florida’s framework may provide substantial protection.
However, gaps remain for investment assets outside retirement accounts, business interests held in single-member LLCs, and any assets you want to protect in a trust structure while remaining a beneficiary. Unmarried individuals cannot use tenancy by the entireties.
For Florida residents with significant wealth beyond the protected categories, comprehensive planning often requires combining Florida’s statutory protections with structures in other jurisdictions. Wyoming’s private family trust company structure appeals to many Florida residents because it allows operational control over trust assets, imposes no state income tax, and provides strong statutory protections.
This is a complex area where the interaction between Florida law and other jurisdictions creates both opportunities and risks. For guidance tailored to your situation, consider consulting experienced counsel like Mark Pierce and Matt Meuli at Wyoming Asset Protection Attorney.