In Florida, stocks and bonds may be protected from the claims of creditors of one spouse in much the same way that the personal residence is protected (with the exception of the Homestead Exemption) because Florida law, as discussed previously, makes immune from the claims upon one of the spouses the property held by both spouses as tenants by the entireties.
As an alternative, the at-risk individual could also gift the assets to his or her spouse, or, as previously mentioned, transfer the assets to the spouse’s Living Trust.
As with all gifts, consideration must be given to the Federal/state gift tax laws which apply to all transfers without sufficient consideration.
In Florida, however, an individual may make unlimited gifts to a spouse without any liability for payment of gift taxes.
Protection of Other Assets:
For other holdings, such as non-homestead real estate and other personal assets and investments, the individual may consider the establishment of a Florida Family Limited Partnership in which the at-risk individual would serve as sole General Partner and own only a small interest as Limited Partner with his family holding the balance of the Limited Partners’ interests.
This would offer the at-risk individual control in the overall entity (as General Partner) yet limit his or her exposure to his or her interest in the future profits in the venture.
Florida Limited Partnership law permits only a ‘charging order’ to be entered against a Limited Partner’s interest, thus entitling a judgment creditor to only profits actually distributed by the Partnership to a Limited Partner (Florida Statutes Chapter 620).
A provision in the Florida Limited Partnership document would grant the General Partner the discretion to make (or not to make) income distributions.
It is further recommended that the spouse’s interest be held as Settlor of a Revocable (Living) Trust to provide additional protection for his or her benefit as to the Trust would provide for discretionary income and principal distributions to the at-risk individual upon the spouse’s premature death.
Appropriate ‘spendthrift’ provisions would be made a part of this Trust.