Garnishment and Asset Protection

There is no mechanism for garnishment in Texas.  In short, there is simply no way to garnish wages or other types of income in Texas.  The closest thing a creditor can do in Texas is try to intercept federal tax refunds, but even that is a long shot in most circumstances.  Ah, the glory of Texas asset protection laws!

Let’s back up for a second, in case we jumped too far ahead.  A writ of garnishment is a legal remedy available to creditors.  It allows creditors to directly receive certain types of payments that would otherwise go straight to you.  For example, if your wages are garnished, then your employer would actually hand a portion of your paycheck directly to your creditors.  In short, garnishment is a harsh remedy, and it can have devastating consequences.

Florida Asset Protection

Unlike Texas, Florida doesn’t provide the high degree of protection from garnishment available in Texas.  (The focus is on these two states because we have A LOT of clients in both Texas and Florida).  But Florida asset protection laws do make one notable exception to a creditor’s ability to garnish wages.  It’s called the head of household exemption.

If you live in the Florida and you are the head of a household, then your wages cannot be garnished.  To be clear, “head of household” is more of a family definition than it is a geographic designation.  What that means is that one can be the head of a household so long as she or he has a legal or moral support obligation for another person such as a spouse, child, or parent.  The supported person does not necessarily need to live in the same home with the head of household (e.g. think about a parent who provides primary support for a child but does not have custody of that child).

The Goal of Asset Protection Planning

The ultimate goal of asset protection planning is to help you set up business entities (e.g. limited partnerships, asset protection trusts, and limited liability companies) in such a way that the writ of garnishment does not apply–in such a way so as to take it out of the equation.  In that way, with a little careful planning and the implementation of tried and true systems, a good asset protection attorney can greatly reduce your risk of ever being garnished.  That’s not just better than the Florida exemption . . . It’s actually very much like moving to Texas (but without all the hassle!).