What Does Asset Protection Mean?
The most basic goal of asset protection is to safeguard your property from being taken by divorce, predators, and lawsuits. Your assets can be protected by maximizing state and federal exemptions, but sometimes the best option is to pay a lower tax rate (such as income tax vs. estate tax).
Fortunately for Texans, state law allows you to protect an unlimited amount of value in your homestead and a sizable amount of personal property as well – up to $30,000 of household furnishings and personal property per spouse, one car for each licensed driver in the household, tax-deferred retirement accounts, life insurance proceeds (with some exceptions), and smaller things such as two firearms, some cattle, and family heirlooms.
As of the date of this article, the federal lifetime exemption amount (the estate tax threshold) is $11.7 million per spouse. If your estate is above that value – congratulations!
However, asset protection isn’t just for the ultra-rich. The lifetime exemption amount is set by Congress, which means it’s subject to change any time Congress is in session. In fact, Congress has already been presented a proposal to reduce the lifetime exemption amount to $3.5 million.
When you account for life savings, investment growth, and payable on death benefits, many estates will fall into estate tax territory without realizing it.
If you’re curious about asset protection planning, or if you’re a high litigation risk, schedule a free consultation with Hunter Sargent, PLLC to learn more.