Blog » A Homestead Exemption for Canadians?
October 3rd 2023Florida (and a number of other US states) permit spouses to own property as Tenants by the Entirety (TE); a form of ownership based on the principal that spouses may be viewed legally as “one person”. Termination of this Tenancy may only occur upon dissolution of marriage; by consent of both spouses; or by seizure/sale of TE property by a joint creditor of Both Spouses. In the absence of a successful proceeding under the Florida Uniform Fraudulent Conveyance Act (demonstrating an intent of the spouses to utilize the TE form of ownership as a mechanism to hinder Creditors) no legal process in Florida exists to permit unilateral creditors of one spouse to reach property held as a TE. A Cdn. judgment against the debtor spouse alone would not under Florida law be exigible against property held by spouses as TE (whether real or personal property).
Property held in TE is treated as Exempt under s. 522 of U.S. Bankruptcy Code; and unlike homestead exemptions in Bankruptcy there is currently no limit to the value of property that may be treated as exempt.
Would a Canadian Court order the non debtor spouse to sell Florida property to aid a Creditor? The general rule is to defer to the foreign jurisdiction when the matter necessarily involves a determination as to the title of foreign real estate. The exception to the rule would require that some legal obligation in Contract/Tort or Equity existed between the Creditor and non debtor spouse that was independent of the non debtor spouse’s acquisition of title in the foreign property. In circumstances where the non debtor spouse has no dealings with the Creditor, the general rule should prevail.
To extend this TE protection to personal property, title could be vested in a U.S. trustee (Trust assets comprising Bank / Brokerage Accounts situated in Florida) with beneficial interests held by spouses in TE. Presumably the Trustee would lack the required minimum contacts with Canada to allow for the enforcement of any Canadian judgment.
DISCLAIMER: This document is written for general information only. It is not intended as legal advice or opinion.
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