Can the Florida Homestead Exemption Really Protect Me From Out-of-State Debt?

Throughout history, many well-known business leaders, actors, and other public figures have used the Florida homestead exemption to avoid debt obligations. But is this really possible? Could you rack up debt in another state, move to Florida, purchase a home, and avoid ever having to pay the money back? This is something you might want to discuss with an experienced asset protection lawyer in St. Petersburg.

You Actually Have to Move to Florida

Merely purchasing real estate in Florida does not allow you to benefit from the homestead exemption. Instead, you have to commit to a new life in the Sunshine State and make Florida your home. You can do this by spending the majority of your time living in Florida and establishing your “domicile.”

Most people who are serious about using the Florida homestead exemption spend at least six months living in the state first. They also obtain a Florida driver’s license, register to vote in the state, and create bank accounts in Florida. Anything that establishes your intent to stay in Florida long-term may help you gain protection under the homestead exemption.

How Strong Is the Florida Homestead Exemption?

The Florida Bar states that in Florida, the exceptions to the homestead exemption are incredibly slim. The Supreme Court has also found that the homestead exemption should be interpreted “liberally.” In other words, debtors should be able to shield their assets from creditors using the homestead exemption under a wide range of circumstances.

Past cases have demonstrated that even when people purchase Florida real estate with proceeds from blatant criminal activity, the homestead exemption has nevertheless prevented foreclosure/forfeiture. One couple was able to keep their Florida property after purchasing it with proceeds from marijuana cultivation.

That said, certain debtors have failed to protect their assets using this strategy. For example, one couple sold their home in Wisconsin and, despite being liable for over $1 million in debt, used the proceeds to purchase a new home in Florida. They then declared bankruptcy. A federal bankruptcy judge subsequently rejected Florida’s homestead exemption, only allowing the couple to exempt $40,000 under this “real estate shield.”

However, the Florida Bar has noted that these cases are in the minority. Most people who seek protection under the homestead exemption are successful, even under extreme circumstances. Many have purchased homes in Florida after losing civil cases, allowing them to “dodge” verdicts.

Can a St. Petersburg Asset Protection Lawyer Help Me? 

A St. Petersburg asset protection lawyer may be able to help if you plan to take advantage of Florida’s generous homestead exemption. While this could be a valid strategy after experiencing severe financial distress in another state, there are many limitations that you should discuss with a lawyer. Consider expanding on this conversation with Drude Tomori Law. Aside from St. Petersburg, we serve clients in Lakewood Ranch, Bradenton, and Sarasota.

Sources:

 floridabar.org/the-florida-bar-journal/the-use-of-the-florida-homestead-to-defraud-creditors/

floridabar.org/the-florida-bar-journal/the-use-of-the-florida-homestead-to-defraud-creditors/