Protecting Assets

 ​Asset Protection Advise and Documentation

Asset Protections

Protecting your property from creditors and claims of other persons involves three basic decisions:
(1) who are you trying to protect the asset from;
(2) how much control and benefit do you want to have over the asset; and
(3) where do you reside and where are your assets located?

Statutory Homestead Exemption

In States like Iowa, the homestead is exempt from most creditors, claimants, and most judgment creditors. The homestead exemption in Iowa is exempt when a person is living and when he or she has passed on but is survived by a surviving spouse or children. The homestead is exempt from the decedent's creditors even when it has been transferred through probate or trust to the surviving spouse or children. There are exceptions to this rule in Iowa including: real estate taxes, mechanic liens, voluntary mortgages, and Medicaid liens.

Illinois has a homestead exemption but it is not as generous as Iowa.

Homestead exemptions in both states can be subject to division between spouses by court order of a divorce or separation, unless the homestead is protected in a prenuptial agreement.

Prenuptial Agreement Protection 

Prenuptial Agreements are a means of protecting a person's assets, usually so a person can transfer those assets to children and other lineal descendants, provided the prenuptial agreement is effectively written and signed by both persons prior to their marriage.

Retirement Accounts and 401k Exemptions

Under federal and Iowa law, 401k and pension plans are exempt from most creditors, claimants and judgments. However a spouse's rights in a person's retirement account cannot be affected unless the spouse has agreed in writing or a division has been made by court order.

Family Businesses and Companies Shareholder or Owner Agreements

Family businesses and companies may regulate and may restrict the owner's rights to make transfers of assets and thereby protect each owner's assets from judgment creditors and other claimants provided properly drafted Buy-Sell Agreements, Operating Agreements, Shareholder Agreements are implemented and signed by all parties. These type of agreements can impose restrictions on the voluntary or involuntary transfer of shares, partnership units or membership interests. These agreements can impose valuation formulas, rights of first refusal and other restrictions on the ownership, to protect the company, its valuation and operation, as well as the individual owner's interest in the company from a person's creditors, claimants, divorces.

Spendthrift Clauses in Trust and Last Wills & Testament

A properly drafted Last Will & Testament, Revocable or Irrevocable Trust that contains spendthrift clauses, can restrict or inhibit creditors of the beneficiaries from obtaining access to the property that is held in trust or being transferred through a Last Will & Testament or Trust.

Specific Asset Protection Trusts:

Many states authorize asset protection trust agreements that allow protection of the property in trust from the claimants and creditors of the beneficiaries of the property, or the grantor that created the Trust. Iowa and Illinois do not current have such statutory protection, but persons residing in Iowa or Illinois can utilize these legally authorized devises under certain circumstances.

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