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The New Florida Exemption Laws

Volume II, Number 5 – September 1993

How Will The Changes Affect You?


On May 14, 1993, the Florida Legislature enacted (without the Governor’s signature) significant changes and added new provisions to Florida’s exemption laws. These changes become effective on October 1, 1993, although the effective date provision could have been more clearly drafted. In this issue, we will examine these new and changed provisions and see how you may be affected.


In a previous issue (AP NEWS, Vol. II, No. 2) we discussed various aspects of Florida’s exemption laws. Our discussion emphasized the wage account exemption as being one that was easily securable by qualified persons, and unlimited in amount. The new law changes things substantially.

One portion of the new statute provides for a complete exemption from attachment or garnishment of the first $500 per week of the disposable (after tax) earnings of a head of a family, and further provides that such person’s earnings in excess of that amount are also exempt unless the person has otherwise agreed in writing. We suppose this means that you can expect to see wage account exemption waiver clauses in contracts where the creditor has greater leverage than the borrower – such as in credit and charge account applications. Keep your eyes open for these waivers.

But this wasn’t the big change. The BIG CHANGE in the wage account statute is that these otherwise exempt earnings will now only remain exempt for six months after the earnings are deposited into the account. That’s right! Previously, there had been no time limit as to how long the earnings could accumulate in the exempt account. In the past, we have seen wage accounts in the hundreds of thousands of dollars; a questionable tactic from an investment perspective, but exempt nonetheless. The wording of the statute, however, may provide a means of extending the six month time limit.

As mentioned above, the six month period begins to run from the time the earnings are deposited into the account. Therefore, if personal circumstances permit, earnings payments may be held by the debtor (not deposited) for several months (more than six months is not recommended – the checks may become nonnegotiable). Under the new law, this would appear to extend the six month exemption limitation for an additional period equal to the time the earnings checks remained undeposited.

Another big change in the law is the addition of an exemption for the earnings of a non-head of a family. The new law reflects the provisions of the federal Consumer Credit Protection Act, and provides that a garnishment cannot exceed 25% of the debtor’s disposable earnings for the week. For persons with disposable weekly earnings of less than $170, a lesser amount is subject to garnishment.

Type of Account

The old law required wage accounts to be bank accounts, while under the new law, they may be accounts in “any financial institution”. Since the term “financial institution” is not defined in the statute, we can only presume that the legislators intended to broaden the type of account which would qualify for exemption. However, until some clarification is forthcoming, we would recommend sticking with some type of bank account.

Some Issues Clarified

The new law clarifies that commingling the exempt earnings with other funds will not of itself defeat the ability of a head of a family to establish the exempt portion of the account by tracing. The statute does not provide this same ability to a non-head of a family, indicating that such persons should follow the advice given in our previously referred to issue regarding strict segregation of the exempt funds.

Another attempt at clarification was made with regard to the type of payments eligible for exemption. The new law does this by defining “earnings” to mean all compensation for personal services or labor, specifically including commissions and bonuses. Previously, the Florida courts had been divided on the issue of whether commissions (such as real estate commissions) and payments to independent contractors could qualify for the exemption.


Drawing a distinction between fraudulent transfers and fraudulent conversions of assets, a new section entitled “Fraudulent Asset Conversions” was included in the legislation. It is apparently aimed at eleventh hour conversions of nonexempt assets into exempt assets. A classic example is the purchase of an annuity contract by a person who has just been sued (annuities are exempt under Florida law).

Such a conversion, if made with the intent to hinder, delay, or defraud a creditor, can be undone under the new law. Intent to defraud the creditor must still be proven, and where the conversion is effected in conjunction with estate planning, or other valid nonavoidance purpose, the creditor will have an uphill battle to prove the requisite intent.

It remains to be seen how Florida’s courts will apply the conversion provision to abuses of the State’s constitutionally based homestead exemption, a “sacred cow” until now. Florida receives negative national press every time a northern scoundrel fleeing his creditors exploits the homestead exemption by purchasing a qualifying property and thumbing his nose at his creditors.

The new provision adds a confusing layer to our fraudulent transfer statute, by providing a strict 4 year limitation period – compared to the rather vague limitation rules contained in Florida’s fraudulent transfer statute. Time, and some court decisions, will enable us to report how these questions have been resolved.

Another new provision, superfluous in our opinion, denies any of the statutory exemptions which result from a fraudulent transfer. In our opinion, this was already the law.


The new act graciously adds an exemption for the debtor’s motor vehicle, up to $1,000 in value. We wonder what type of motor vehicle the legislature had in mind… The act also exempts professionally prescribed health aids of the debtor or his dependant.

Finally, although the new fraudulent conversion and fraudulent transfer rules will be applicable to them, the important annuity and life insurance exemptions came through the recent legislative session unscathed, a surprise in view of the attack they weathered two years ago.


The new act is effective with respect to “an attachment, a garnishment, or other legal process that arises as a result of a contract, a loan, a transaction, a purchase, a sale, a transfer, or a conversion occurring on or after October 1, 1993.” Presumably, an act of malpractice or other tort is considered a “transaction”; we suggest the effective date provision could have said so.

Donlevy-Rosen & Rosen, P.A. is a law firm with a focus on asset protection planning and offshore trusts. Attorneys Howard Rosen and Patricia Donlevy-Rosen co-founded the firm in 1991, and have since become recognized authorities in the field of asset protection planning. Let us explain the significant difference our experience can make when protecting your assets. Call 305-447-0061 or simply visit our contact page