Laws governing property rights vary from state to state. It pays to know that in Florida, the following rules apply:
Residential properties in Florida are protected under the state Constitution without any limits on value. However, this protection is limited by lot size. Any property larger than a half acre will not be covered.
For example, a luxury Miami Beach condo measuring 7,000 square feet worth $35,000,000 is fully protected. However, a 1-acre property will only be protected for up to half its value.
Tenancy by the Entirety (TBE)
Florida law recognizes TBE, a type of joint property ownership that protects real estate assets shared between a husband and a wife.
Under these terms, each spouse has the rights of survivorship, such that if one dies, the other becomes the sole owner of the property. At the same time, the property cannot be sold unless both spouses grant permission to sell or transfer their ownership interest.
Asset protection through Tenancy by the Entirety is lost when one spouse dies or if the spouses divorce. There is also no protection when the creditor sues both spouses.
Limited Liability Company (LLC)
The rule of thumb on protecting investment assets is to not title the property in your own name. Being sued for damages from property registered under your name will result in your other investment properties, as well as personal assets, vulnerable to seizure.
Title each of your investment property assets as Limited Liability Companies instead. The emerging entity of choice for owners seeking property protection, LLCs guard owners from personal liability while also providing protection for individual investment assets. LLCs also allow more flexible tax planning.
Limited Liability Limited Partnership (LLLP)
LLLPs are a relatively new legal entity that is based on other known forms of incorporation.
These partnerships are relevant for groups of owners or investors who undertake projects such as hotels, apartment or condominium complexes, or other commercial buildings. LLLPs protect each investor from the shared debt, including the proponent partner (general partner) who organized the project. In a traditional limited partnership, the general partner is typically exposed to unlimited liability.
Holding separate LLC entities under one LLLP is a strategic way to take advantage of both forms of protection, while simplifying the tax filing procedures required for the involved properties.
Protecting assets by gift giving
In Florida, parents can give their children real estate as a gift. If a piece of property is titled under the child’s name, it provides significant asset protection because creditors cannot seize the property in case of disputes.
It also serves to lower taxable assets in case of the parents’ death.
There are many ways to protect your assets under state or federal law. Always remember to consult your lawyer for advice on the most reliable protection strategies to suit your needs.
For more expert real estate advice for your property assets in Miami Beach, Aventura, and Sunny Isles, FL, contact Sigal Realty Group today at 786-797-9088 or send an email to sigaldagan(at)gmail(dotted)com or ydagan(at)onesothebysrealty(dotted)com.