Robinson Seeks To Exempt IRAs As Collateral

Todays News

BY JACOB OGLES SRQ DAILY MONDAY BUSINESS EDITION MONDAY MAR 22, 2021

State Rep. Will Robinson, R-Bradenton wants to close a loophole in Florida law that lets abusers take hold of substantial assets in a deal. The second-term lawmaker hopes to find support for legislation in the ongoing legislative session.

“This deals with a really nutty 11th Circuit Court decision," Robinson explained. In a ruling for Kearney Construction v. Travelers Casualty & Surety of America, courts allowed for a line of credit to be pulled on “all” of a debtors assets as collateral for a loan. The borrower said that was done unwittingly. Nonetheless, the language drafted by the lender amounted to an “unambiguous pledge,” according to the courts. The meant the debtor’s IRA could be used as security on the loan, even though the borrower did not realize that when the document was signed.

“A lender could securitize normally exempt assets,” Robinson said. “Think about your pension.”

That goes too far, Robinson said. He’s filed a bill this year that would require any assets put up as collateral on a loan to be spelled out specifically, in particular those items normally exempt under Florida law from the reach of creditors.

A House staff analysis of the bill notes several areas of assets that under Florida law are normally exempt, and which many before the court ruling presumed could not be netted up with a vague reference to “all” assets. Those items include IRAs, as well as life insurance payouts and disability income.

The bill has already won unanimous support from the House Civil Justice and Property Rights Subcommittee and awaits a vote in the Insurance and Banking Subcommittee.

This happens to be the first significant piece of legislation Robinson has worked on with a Democrat as the sponsor in the House. Sen. Lori Berman, D-Boynron Beach, is carrying the bill in the upper chamber.

Photo courtesy Florida House of Representatives

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