Aren’t certain assets automatically protected from lawsuits and creditors?

Yes.  By federal and state laws, certain types of assets and accounts may be all or partially protected.  The amount and type of assets that are protected can vary a bit from state to state.

Assets that may be protected:

NOTE: These assets may be protected from lawsuits and creditors, but they are not protected for nursing home and Medicaid planning purposes.

  • Real estate owned jointly by husband and wife—referred to as “tenants by the entirety” is afforded protections in certain contexts

  • Death benefits from life insurance policies if the beneficiary is a spouse, or a trust for the spouse’s or child’s benefit
  • Annuities, if the beneficiary is a spouse, child, or a trust for a spouse’s or child’s benefit
  • Retirement plans such as IRAs, 401(k)s, pension plans, profit sharing plans and similar plans
  • Asset protection trusts for your benefit established by someone else, such as your parents or grandparents
  • Assets held in a limited liability company (LLC), depending upon the context
  • Assets held in a family limited partnership (FLP), depending upon the context
  • Assets held in certain types of asset protection trusts established by you for your own benefit

Assets that are NOT protected:

  • Real estate only in your name
  • Real estate owned jointly with someone other than your spouse
  • Cash value and death benefits from life insurance policies if the beneficiary is your estate or someone other than your spouse, a child, or a trust for your spouse’s or child’s benefit
  • Stocks, bonds and brokerage investment accounts
  • Cash, Certificates of Deposit (CDs), checking accounts, savings accounts, money market accounts
  • Monies owed to you (such as notes receivable or mortgages receivable)
  • Business interests, such as stock or ownership interest in your corporations, partnerships, limited liability company (LLC) or sole proprietorships
  • Tangible personal property, such as china, antiques, silver, crystal, jewelry, furniture, appliances, collections and other valuables
  • Vehicles, such as cars, trucks, motorcycles, airplanes, boats, all terrain vehicles (ATVs), motor homes, recreational vehicles (RVs) and similar