We recently published an article about a California court ordering a Florida widow to sell her homestead and how the order was upheld in a Florida court. With respect to California asset protection laws as they relate to and are enforced in Florida, that’s “how the cookie crumbles.” A distinct but related topic is the subject of this article: garnishment of out-of-state bank accounts. This article discusses a court decision that reaches a different result that is absurdly at odds with the homestead decision referenced above, which highlights one simple fact . . . the only truly safe pace for your assets is in an offshore asset protection trust–beyond the reach of the United States court system.
Creditor Weapons: The Writ of Garnishment
When a creditor obtains a judgment against a debtor, the court will allow the creditor to probe deeply into the debtor’s financial affairs to identify assets that can be used to satisfy the judgments. This often leads to disputes over which assets ought to be classified as exempt assets and which can permissibly be seized by creditor to make it whole.
One weapon in the creditor’s arsenal is a writ of garnishment. A writ of garnishment typically pertains to cash held by a financial institution or employer. In the case of a bank account with cash in it, the writ of garnishment would instruct the bank to withhold funds from the owner of the account and, instead, direct them to the creditor. Pretty straightforward and intuitive.
Bank Accounts in Other States
While the concept behind a writ of garnishment is indeed simple, what happens when a Florida creditor seeks to garnish an account that was opened in an out-of-state branch? A Florida federal district court has ruled that such an account can only be garnished in the state where the account was opened. As a example, consider PNC Bank. PNC is a Delaware bank with branches in Florida and Pennsylvania. If a debtor opens and funds an account in Pennsylvania, moves to Florida, and has a judgment entered against her, the creditor must still “domesticate” the judgment in Pennsylvania in order to garnish the bank account . . . even though the debtor has full access to the funds via Florida branches of PNC!
Domestic asset protection laws are often absurdly contradictory. That’s because the legal system, which relies on precedents, cannot anticipate and account for all scenarios. In some sense, judges are left to address new situations in a way that tests possible outcomes. Do you want your assets and the fruit of your labor to be the subject of a legal experiment? If you have questions about how you can protect yourself, contact an asset protection attorney right now.
This Post Has 0 Comments