Disability benefits deposited in a bank account

[david76]

What is the name of your state? FL

I am judgment debtor and recently disabled permanently. I am depositing my disability benefits I receive from my disability company (this is not social security disability benefits, but from a private insurer with whom I purchased the insurance when I was not disabled) in a separate bank account, are they protected from the judgment creditor? I read Statute 222.18 but still unsure.

 

[Zigner]

http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0200-0299/0222/Sections/0222.18.html

222.18 Exempting disability income benefits from legal processes.—Disability income benefits under any policy or contract of life, health, accident, or other insurance of whatever form, shall not in any case be liable to attachment, garnishment, or legal process in the state, in favor of any creditor or creditors of the recipient of such disability income benefits, unless such policy or contract of insurance was effected for the benefit of such creditor or creditors.

That specific code section seems pretty straightforward (the last sentence appears to mean that you can't have established the policy for the sole purpose of dodging your creditors). I do not believe those finds are able to be garnished/attached. Now, they may TRY to do it, at which point your bank will put a hold on your funds and give you the opportunity to respond.

 

[PayrollHRGuy]

I don't think that is what that last part means. I think it is talking about a policy that was specifically created to pay the creditor. Like an auto life policy that you can buy when you finance a car.

 

[Zigner]

I don't think that is what that last part means. I think it is talking about a policy that was specifically created to pay the creditor. Like an auto life policy that you can buy when you finance a car.

You're probably right. In any case, it doesn't affect the OP's situation.

 

[david76]

Greatly appreciated. I am planning to go back to Australia where all my relatives are there and wish to spend rest of my life there. If I give power of attorney to my son living in US, will he be allowed to do all the activities with my disability bank account, including money withdraw, on my behalf?

 

[Taxing Matters]

I am judgment debtor and recently disabled permanently. I am depositing my disability benefits I receive from my disability company (this is not social security disability benefits, but from a private insurer with whom I purchased the insurance when I was not disabled) in a separate bank account, are they protected from the judgment creditor? I read Statute 222.18 but still unsure.

With statutes like that one there are two possibilities. First, that the creditor cannot send a garnishment/levy to the insurer paying the disability benefits but could grab the money after it was paid to you, e.g. grabbing it from the bank account where the money was deposited. The second possibility is that the money is protected from attachment even after it is paid to you, so long as it can be identified as coming from the disability benefits. The way to know which of those possibilities applies here you have to look at the case law (court decisions). Fortunately for you, the Florida courts have decided that the second option is what applies in Florida:

We adopt the reasoning of the bankruptcy court in In re Ryzner, 208 B.R. 568 (Bankr.M.D.Fla.1997), applying the Broward analysis to section 222.18.2 Accordingly, we hold that the statutory exemption for disability benefits, provided by section 222.18, operates not only to protect such benefits in the hands of the insurer, but also in the hands of the insured or beneficiary.​

Parl v. Parl, 699 So. 2d 765, 767 (Fla. Dist. Ct. App. 1997). So, your benefits are protected so long as the money can be sourced to the disability benefits. In situations like this I recommend that clients keep their funds in a separate account into which only the protected benefits are deposited. That eliminates the problems of commingling with nonexempt funds that can make it hard to determine what funds are truly exempt. And if you can't trace the disability funds adequately those funds can be at risk. When all the funds in the account are disability benefits you don't have that commingling problem.

Greatly appreciated. I am planning to go back to Australia where all my relatives are there and wish to spend rest of my life there. If I give power of attorney to my son living in US, will he be allowed to do all the activities with my disability bank account, including money withdraw, on my behalf?

You may certainly give him the power to do those things. I suggest contacting the bank to ensure the format of the power of attorney is to its satisfaction.

 

[david76]

Greatly appreciated.