Asset Protection …Strategies for Protecting Your Home In Case of Judgment Against You
—Susie S. Brousseau, CLU, ChFC, CFP®
Along with earning power and retirement accounts, the home is often the family’s most valuable asset. Beyond its financial worth, the home often has significant emotional value. Many clients who engage in asset-protection planning often begin with the question: “How can I protect my home?”
There are a number of strategies for protecting the home, each with pros and cons. State homestead laws, tenancy by the entirety (TBE), limited liability companies (LLCs), family limited partnerships (FLPs), and the debt shield are some of the most important strategies. Let’s look at them…
State Homestead Law
Every U.S. state has some type of homestead protection law. In most states, such as New Jersey, New York, California and Arizona, the level of protection is very low when compared with actual market value of the real estate (New Jersey $0, New York $100,000, California $50 to $100,000 and Arizona $150,000). On average, state homestead law protection ranges between about $30,000 and $50,000 of equity—much less than the typical home value of the affluent.