Charles Rubin discusses the case of JBK Associates, Inc. v. Sill Bros., Inc. The case shows an example of a situation in which one can protect their proceeds from a homestead sale for reinvestment by investing the funds in certain securities accounts. The article begins,

An individual sold his interest in a Florida homestead, and put a portion of the proceeds in two Wells Fargo brokerage investment accounts entitled “Fl. homestead account..” The account was invested in mutual funds and unit investment trusts.

The Florida constitution protects a Florida homestead from claims of creditors of the owner. This has been extended to the proceeds from sale of a homestead if (1) there is  a good faith intention, prior to and at the time of the sale, to reinvest the proceeds in another homestead within a reasonable time; (2) the funds are  not commingled with other monies; (3) the proceeds are kept separate and apart and held for the sole purpose of acquiring another home.

The creditor in the instant case claimed that the owner lost homestead protection due to the investment in securities. The trial court accepted the creditor’s argument, but the district court of appeal rejected it. The Florida Supreme Court took on the case and sided with the owner of the property, holding that the accounts maintained protection as homestead property.

Read the full story here: Rubin on Tax: Brokerage Account is a Safe Account to Temporarily Hold Homestead Sale Proceeds for Reinvestment

Posted by Allison Trupp, Associate Editor, Wealth Strategies Journal