Why you should be a Florida resident, Part II
The second reason to become a Florida resident is that Florida has favorable asset protection laws to protect its residents. The most widely used asset protection technique is the homestead. Only a few states even recognize some sort of homestead protection to protect ones home from a forced sale (subject to three exceptions in Florida). In order to qualify for the homestead exemption, you must 1) intend to permanently reside in Florida; 2) have legal or beneficial title in equity to the real property on the 1st of January; 3) reside on the property; and 4) in good faith make the property their personal residence. There are land limitations on the homestead though. If the land is within a municipality, the protection is limited to one-half. If located outside a municipality, then the limitation is to 160 contiguous acres. Further, due to the Bankruptcy Act of 2005, for the first 1,215 days your own your homestead, you only have an exemption of $136,875. This prevents someone from moving to Florida, putting all their money into their homestead and then filing bankruptcy.
Life insurance proceed are also exempt from the creditors of the insured unless the policy or a valid assignment provides otherwise. The cash surrender value of insurance policies insuring the life of a Florida resident and the proceeds of an annuity contract issued to a Florida resident are exempt from the reach of creditors. Money or other assets payable from a qualified retirement or profit-sharing plan are exempt from claim of creditors of the beneficiary and participant. Assets set aside in a medical saving account, college trust fund or 529 plans are protected from creditors. Finally, assets titled as tenants by the entirety, only available to husband and wife, are exempt from the creditors of one spouse. If the creditor is a creditor of both spouses, this protection does not exist.
Becoming a Florida resident is easy as Florida is an intent state, meaning if you intend to be a Florida resident, then you can be. The bigger problem is having the state you have left no longer claim you as a resident. A few simple steps can allow you to show your intent and hopefully break any connection you may have with your old state of residency.
Florida residents and others should consult with an estate planning and tax attorney to review the various documents and strategies to take full advantage of the asset protection benefits under Florida law.
