What Is Already Protected?
If you’re lucky, some of your assets may already be protected. It all depends on where you live since the laws are different from state to state.
Chances are that your homestead is your single biggest asset, and if you’re fortunate enough to live in Florida or Texas, or in a state with a similar homestead exemption law, your house will be safe no matter how much equity you may have.
If, on the other hand, you live in most other states, your exemption could be limited to as little as $5,000 or $10,000, which will put your home at risk if you have significantly more equity in your home, unless you take measures to protect it.
In addition to the basic homestead exemption, there is another possible way to protect your home, at least to a point. If you live in one of those states, for example Michigan, that allow married couples to own their home as Tenants in Entirety (TE), you will have a certain degree of protection. If a home is titled as TE, a creditor cannot force you to sell your part of the home. The home in its entirety belongs to you AND your spouse, and the law is there to ensure that you will be able to stay in your home, together.
Unfortunately, if your debt is a joint debt, owed by you AND your spouse together, a TE title will not protect you. Besides, the exact legal status and the availability of that type of protection differs from state to state. So you should definitely consult an attorney to find out exactly where you stand and to get any help you might need with protecting your home.
There are other types of assets that are already protected in many cases, especially certain life insurance policies or annuities, and also certain types of retirement accounts. This is why other assets, such as Accounts Receivable and home equity are often shifted into life insurance policies. [DID YOU FIND THIS SOMEWHERE? I'VE NEVER HEARD OF THIS.]
Once again, however, you will need the help of a qualified attorney to make sure that your life insurance policy and your retirement account is set up properly and is indeed protected. Since the exact legal situation varies from state from state, and since those laws themselves frequently change, you’ll want to make sure you have the exact information that applies to your specific situation.
You are welcome to request a free consultation with one of our well-trained advisors in your area, who can help you to know exactly which of your assets are safe and which are at risk.
