Are annuities protected from creditors in Florida

Are annuities protected from creditors in Florida

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 What are annuities and how they can be a great asset protection from Creditors

Annuities are designed to pay you a stream of cash over the course of your life.

Depending on the options you choose, this amount can be guaranteed for life.

This makes taking substantially equal payments very easy – that’s what annuities are designed for.

It’s also comforting for many people to know that they’ll have a monthly income source for their entire life and won’t outlive annuity payments.

Another benefit of using annuities for asset protection is that you can actually be exposed stock market gains while protecting yourself from market losses.

You can accomplish this with indexed annuities.

With indexed annuities, your rate of interest is tied to the performance of one or more financial indices.

When those indices rise, your interest rate can be much higher than for a fixed-rate annuity.

The great part, though, is that if the market is down and the indices decline, you don’t lose money. With fixed indexed annuities, you’re guaranteed not to lose money, no matter how bad the market fares.

Annuities can function in one of two ways:

  • You can make a single large deposit (premium), and begin receiving income right away. This is known as an immediate annuity.
  • You can make a series of premium payments that accumulate interest for years and elect to receive payments sometime in the future. This is a deferred annuity.

You can utilize either type of annuity in your asset shielding strategy.

You might elect to deposit a large accumulation of savings into an annuity, as well as make ongoing premium contributions from your cash flow.

These funds will grow with interest (especially if an indexing strategy is used) and will be available to pay you income at any age.


Annuities for Creditor Protection and your Financial Plan


Advanced planning is very important for another reason: If you become subject to a lawsuit it will be too late to utilize some of these strategies. You must have the funds protected in annuities before the need arises.

Life insurance and annuities have the rare advantage of being protected from most judgments and liens.


While laws vary from state to state, often these insurance proceeds are considered uncollectible assets.


As a matter of policy, they also bypass probate.


If protecting your assets from creditors is your goal, then life insurance or annuities might be the ideal financial vehicle for you.


Annuities in Florida Asset Protection : Are annuities protected from creditors in Florida

In some states, such as Florida, an annuity is protected from creditors.

Debt collection and judgment enforcement, whether a judgment creditor, i.e., one who has a monetary judgment in her favor against someone, can collect on that judgment from either an annuity or the cash surrender or proceeds of a life insurance policy purchased by the judgment debtor.

The answer, at least in Florida, is a pretty emphatic “no.


Florida Statute 222.14 provides that proceeds from an annuity contract issued to a Florida resident are not subject to attachment, garnishment, or legal process in favor of any creditor of the beneficiary of the contract.


Florida Statutes Sec. 222.13(1) provides:

(1) Whenever any person residing in the state shall die leaving insurance on his or her life, the said insurance shall inure exclusively to the benefit of the person for whose use and benefit such insurance is designated in the policy, and the proceeds thereof shall be exempt from the claims of creditors of the insured unless the insurance policy or a valid assignment thereof provides otherwise. Notwithstanding the foregoing, whenever the insurance, by designation or otherwise, is payable to the insured or to the insured’s estate or to his or her executors, administrators, or assigns, the insurance proceeds shall become a part of the insured’s estate for all purposes and shall be administered by the personal representative of the estate of the insured in accordance with the probate laws of the state in like manner as other assets of the insured’s.

Similarly, Florida Statutes Sec. 222.14 states

The cash surrender values of life insurance policies issued upon the lives of citizens or residents of the state and the proceeds of annuity contracts issued to citizens or residents of the state, upon whatever form, shall not in any case be liable to attachment, garnishment or legal process in favor of any creditor of the person whose life is so insured or of any creditor of the person who is the beneficiary of such annuity contract, unless the insurance policy or annuity contract was effected for the benefit of such creditor.

The above law is very clear.  Someone holding a judgment that remains outstanding must look to sources other than annuities or the cash surrender or proceeds of life insurance policies—unless the life insurance policy specifically provides otherwise—in order to enforce that judgment.

The Florida courts have broadly construed this statutory exemption to include both commercial annuities and privately issued annuities between family members.

Further, under Florida law there is no limitation on the amount of the annuity that may be protected.

Therefore, converting individually owned property, which may be subject to the claims of future creditors, to a private annuity, is a means of asset protection.

Regardless of how much money you have accumulated, you probably worked very hard for it and want to make sure that you protect it at all costs.

Depending on the state you live in, annuities might be able to provide a solid asset protection plan that is backed up by actual law. 

Does the State Which You Purchase an Annuity in Matter?

Annuities are one of the most diverse retirement investment products available in the marketplace.

They come in all shapes and sizes.

While this fact is widely known, what many people do not realize is that annuities vary greatly from state-to-state.

Buying a product with the same name from the same company in one state could yield completely different results than buying the same product from the same company in a different state.

Annuities as a whole are valued differently from state-to-state because each state has different tax laws and tax codes which can greatly influence the way a product is designed as well as how it pays out upon annuitization.

Not all annuities owned by Florida residents are protected from their creditors.

Protection does not depend upon the type of annuity or the issuer of the annuity, but asset protection does depend upon the state where the annuity was issued to the debtor.

There are 4 states, those being Connecticut, Massachusetts, New Hampshire, Virginia that have ZERO creditor protections for annuity policyholders.

Conversely, there are 5 states: Michigan, Florida, Texas, Colorado, Illinois that have unlimited protection for annuity policy owners.  And, all the rest of the states fall somewhere in between.

Often your original asset can be improved upon for creditor protection purposes if you do buy an annuity. However, the amount of the creditor protection you will actually receive depends upon the laws of your state and your specific circumstances.

Planning Ahead is Critical to protect your assets from Creditors


You can’t protect your money by shifting it into a retirement account after you’ve already been sued or when you know that bankruptcy or litigation is imminent.

Courts and regulators will sniff out this type of abusive transfer immediately and impose severe penalties.

You must be able to show that asset protection has been part of the plan all along and wasn’t undertaken in reaction to some financial threat that just appeared on the horizon.

This is why it’s critical to determine how you plan to protect retirement assets as far in advance as possible and never during a crisis or dispute with a creditor or potential litigant.


Mintco Financial Annuity Financial Planning in Florida


At Mintco Financial we specialize in building portfolios using principal protected, guaranteed annuity investments.

We are experts at helping our clients build successful conservative investment strategies.

It is our mission to make sure we preserve wealth, grow principal, and insure longevity risk to offer peace of mind for our clients.


Let our Team help you, drop us a line.

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