Legal Question in Bankruptcy in Florida

Florida exemptions are based in Chapter 222.21 of Florida Statutes. The statute provides an exemption for any qualifying retirement accounts (qualifying in the IRS sense). The caselaw in Florida leans heavily toward these funds being exempt unless they are otherwise converted into something else.

Like most legal issues, where exactly the line falls is a matter of debate between trustees and debtors' attorneys. Think of it as shades of gray. For example, if you take your lump sum and roll it directly into another qualifying retirement account, such as an IRA, then you are most likely in the clear. If you take your lump sum and drop it into your checking account along with your other money, your trustee will make life hard on you and may even be able to reach those funds due to the commingling. As I'm sure you can imagine, there are a variety of options in between those two extremes and each fall along the gray spectrum.

In a nutshell, though, you will be best off if you avoid as much gray as possible, since gray means a higher likelihood of your trustee having a claim against the asset and thus more litigation. More litigation, more attorneys fees... You get the idea.

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