Follow the few effective ways to protect your assets from civil lawsuits:

Appropriate Insurance Coverage

One of the most basic yet effective ways to protect your assets is through appropriate insurance policies. Purchasing liability insurance can help cover legal costs and potential damages owed if you are named in a civil lawsuit.

Some key types of liability insurance to consider include:

• Homeowners or renters insurance: Provides coverage if someone is injured on your property or in your rental home. Look for policies that offer high liability limits.
• Auto insurance: In the event of a car accident, your auto policy will cover costs to repair the other vehicle and pay for any medical bills or injuries incurred. Opt for strong liability coverage amounts.
• Umbrella insurance: This additional policy kicks in after your standard homeowners, auto, and other liability insurance limits are exceeded. Umbrella insurance provides further protection for assets by covering higher damages awards.

It’s important to review insurance needs annually with your agent. As your assets grow over time, it’s wise to increase liability coverage amounts accordingly. Proper insurance is often the first defense against significant financial loss from a civil lawsuit.

Florida Homestead

A Florida homestead provides strong legal protection for your primary residence by shielding equity in your home from civil judgment creditors. Under Florida law, up to one-half acre within city limits or 160 acres outside city limits qualify for homestead exemption.

Once established as your permanent residence, your homestead property cannot be seized to satisfy debts through a court judgment, such as an accident lawsuit. Creditors cannot force the sale of your homestead to recoup awarded damages.

A few key things to note about establishing your homestead:

• You must reside in the property as your permanent home. Second homes or vacation properties do not qualify.
• Formally declaring homestead through your county property appraiser further strengthens protections.
• Proceeds from selling your homestead within 6 months would still be exempt from creditors up to the same value as when you sold.

With significant assets tied up in real estate, Florida’s generous homestead exemption can offer strong peace of mind from civil court judgments threatening your family’s shelter.

Tenants by the Entireties

Another powerful asset protection strategy in Florida is ownership through tenants by the entireties. This form of joint ownership applies solely to married couples where both spouses hold an equal interest in the owned property together.

Assets held as tenants by the entireties cannot be seized by creditors of only one spouse. Both spouses are considered to own 100% of the entire property collectively. This shielding effect often extends to bank accounts, investment accounts, vehicles, and real estate.

To establish tenants by the entireties ownership:

• A married couple must jointly purchase the asset.
• Tenants by the entireties or similar language must be documented in legal titles and documents.
• Divorce or the death of one spouse automatically dissolves the entire protection.

Unlike homesteads, there are no acreage limits for real property held as tenants by the entireties. If sued individually, only one spouse’s income and separate property could be targeted by creditors, not entireties assets jointly owned with their spouse.

When appropriately structured, tenants by the entireties are a powerful defense against a single spouse’s civil debts or lawsuit judgments threatening valuable shared assets. Consult an attorney on properly establishing this ownership for maximum effect.

Limited Liability Companies

Forming a limited liability company, or LLC, is another strategy used by business owners and professionals like doctors and contractors to separate personal assets from business debts and liabilities.

An LLC creates a legal shield between its owners and the company. Personal assets outside the LLC generally remain protected even if the business is sued. Legal judgments against an LLC typically cannot reach an owner’s personal property, vehicles, primary residence, or other personal assets unless there was gross personal misconduct involved.

To benefit from LLC protections:

• An operating agreement should establish the LLC and ownership rules.
• Personal assets must remain separate, not commingled with LLC funds.
• LLC formalities like holding meetings and keeping financial records separate must continue to be followed.

For those business owners or professionals wanting separation between their incorporated operations and personal finances, forming an LLC to conduct activity is a prudent approach for coverage from potential civil lawsuits.

Frequently Asked Questions