Exemption Planning

Exemption planning considers the use of statutory exemptions from collections as set forth by either Congress or the state legislatures. The goal of such planning is to maximize the debtor’s use of the available exemptions. The debtor’s fullest use of exemption planning may be significantly restricted by the 2005 changes to the Bankruptcy Code, unless the planning is done well in advance.

• Homestead Exemptions
  http://www.assetprotectionbook.com/a2_asset_protection_exemption_homestead.htm
  State-by-state links to each state’s homestead statutes and to key opinions interpreting the homestead exemptions in each state.

• Life Insurance and Annuity Exemptions
  http:/www.assetprotectionbook.com/life_insurance_exemptions.htm
  State-by-state links to each state’s statutes discussing exemptions for life insurance and annuities and to key opinions interpreting the exemptions in each state.

• ERISA’s Anti-Alienation Provisions
  http://www.assetprotectionbook.com/a2_asset_protection_exemption_erisa_welfare_benefit_plan.htm
  Includes the text of 29 U.S.C. § 1056(d)(1) and select opinions interpreting that provision as it relates to debtor-creditor issues.

Filing for Exemptions and Forms

Please note that we do not assist persons with filing for their homestead exemption, nor do we sell or provide any forms for this purpose. Persons desiring such should either contact their local attorney, or often the office of their local county clerk or registrar of deeds, for such information and forms.

Please do not contact us for assistance in filing for homestead
or to request forms.

Homestead and the New Bankruptcy Reform Act

Most significant is the limitation of the state homestead exemption in bankruptcy to $125,000, regardless of state law providing for a larger or unlimited exemption. This limitation applies to homestead interests that are acquired within a 1215-day (3 years and 4 months) period prior to the filing of the bankruptcy petition. However, if the debtor has a claim arising from violations of federal or state securities law, RICO, fiduciary fraud, or from certain crimes or intentional torts, then the cap is $125,000 regardless of when the property was acquired. Rollovers of exempt homestead interests are not allowed even if those interests were exempt in both states. Thus, the debtor who moves from Texas to Florida will re-trigger the 1215 day period, despite the fact that both states have unlimited homestead exemptions.

Obviously, it will no longer be possible for debtors to wait until they have been sued to try to move to a state with an unlimited homestead exemption. Not so obviously, financial professionals and corporate officers or directors should now reconsider the idea of maintaining significant equity in their residences; if such a person ends up on the wrong end of a judgment, the debt may be one that will limit the homestead exemption in bankruptcy to $125,000, regardless of the length of residence in the state.

Full article at http://www.assetprotectionbook.com/Dev_May2005.htm#NewAct

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This website is by far the largest and most comprehensive creditor-debtor and asset protection resource available anywhere. This website hosts thousands of pages of articles, cases, statutes, analysis, and many other resources to assist planners and judgment collection professionals in researching contemporary creditor-debtor issues.

While the articles and analysis on this website are most often drafted from a planner's point of view, creditor attorneys and judgment collection professionals will also find many of these resources to be highly useful. We have tried whenever possible to be balanced in our analysis by pointing out strengths and weaknesses in different structures and strategies from both the planner's and creditor's viewpoint.

This website was primarily created to support our book Asset Protection: Concepts and Strategies (McGraw-Hill 2004). Because of the publishing agreement with McGraw-Hill Companies, Inc., certain articles which were used as the basis for that book have been withdrawn from internet publication. It is suggested that the book be used as the primary resource, and that the other materials on this website should be used as supporting materials only as needed.

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