Exempt Assets
Exempt assets have the following advantages: they are the most well legally protected of all assets, there are no legal or accounting fees associated with protecting them, and you always have full access to your assets.
Bankruptcy Exempt Assets
If you have filed your bankruptcy or a Chapter 7, federally exempted assets are automatically protected under federal law. The most important asset classes that are thus protected include qualified retirement plans (QRPs) such as 401(k)s, money purchase plans, and IRAs. This form of protection is unfortunately only available should you file for bankruptcy.
More Chapter 7 Exempted Assets
State Exempted Assets
The most important state exempted assets include the following:
QRPs or IRAs
While federal laws protect QRPs and IRAs should you go into bankruptcy, state laws protect QRPs and IRAs under all conditions. However, the extent of protection varies according to state.
Life Insurance Policies
Life insurance policies are well shielded in all the US states. While many states protect policy proceeds from creditors, other states even protect against the creditors of the beneficiaries.
Homestead
This legal term refers to your primary residence. However, most states actually only protect up to $60,000 of the homestead’s equity, while states such as New Jersey provide no protection. You should always compare your home’s protected value to your total level of home equity. Then, you would be able to determine how much vulnerable equity you have.
Annuities
Annuities are also shielded in almost all states, though you should first determine if annuities are good investments in the first place.
Return from Assets that are Exempt to Financial Investment Advice
Return from Exempt Assets to Financial Freedom and Passive Income Success Guide