Many clients ask if asset protection means protecting all their assets. The answer is: No. Not all assets are treated in the same manner. In fact, some assets are exempt from attack, while others need more protection. For example, what you have in your bank account can be more easily attacked than the home you reside in. But you should still consider the difference between exempt and non-exempt property as you develop your asset protection plan.

Examples of exempt property include:

Public and private retirement benefits;

Household furniture and furnishings;

Personal effects, such as clothing and jewelry;

Disability and health benefits;

Proceeds of life insurance and annuity policies;

Social security benefits

Tools of a trade or business.

The laws that govern whether a property is exempt or non-exempt vary from state to state. Therefore, when looking at your state law, you should be sure to check to see how much of an exemption is allowed for the particular type of property; it may be completely exempt, or it may be exempt only up to a certain amount. For example, jewelry, heirlooms and works of art may be exempt up to $10,000, while 100% of the assets in your pension plan may be exempt.

By using the applicable exemptions, both you and a knowledgeable attorney can structure your property holdings to turn non-exempt property into exempt property. For example, instead of putting cash into a bank account, you might instead want to fund a retirement program. Using the allowable exemptions is one of the most cost effective techniques for asset protection. Unfortunately, exemptions alone are insufficient to protect many of your assets, which mean that more sophisticated techniques may be required.

If you would like more information regarding asset protection, trusts, family limited partnerships or the subject of this article please call or email our office.