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Being Exempt From Creditor Assets Is the Key to Financial Security

Being Exempt From Creditor Assets Is the Key to Financial Security
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By    |   Monday, 09 April 2018 08:05 AM

Do you want financial security?

That usually takes a lot of assets and cash flow.

Unless you are lucky enough to be part of the silver spoon club, you must earn enough over your lifestyle costs to have money for saving and investing.

Do you want that peace of mind feeling you can live comfortably without working?

Achieving that level of financial security is a matter of achieving two important planning objectives

Then, you must get your money working for you; and be able to keep it working.

The first goal of financial security is the acquisition of enough assets to assure the maintenance of a comfortable lifestyle.

The second aim of your financial security plan is organizing your valuable assets to be protected from being taken away.

Assets can be stolen, taxed, lost by bad investment, and through lawsuits and predatory legal claims.

Property can be guarded and insured; tax planning can dull the impact; modern money management lessen investment losses; but what about legal pillagers?

Wouldn’t it be perfect if your hard-earned wealth was legally exempt from lawsuits and other financial marauders using the courts?

All states and the federal bankruptcy law allow legal protection from creditors if in exempt assets.

This means that as a matter public policy certain assets or ways of holding assets are safeguarded from creditors.

Always remember that the IRS is the super-creditor with special federal powers to collect. Defending assets from its collection clutches are, and I’m understating this, very difficult.

The property exempted from all the other creditors varies widely from state to state--as are the limitations on their use.

The low tax states, like Texas and Florida, are at the good end of the exemption protection scale; while the high tax states, like New York, New Jersey, and California, are at the bad end of the exemption scale.

For wealth protection planning purposes, it's best to hold assets, or even locate yourself, in one of the good exemption states.

Florida, where I live, gives, as they say, a lot of bang for the buck.

Homestead protection in Florida allows that an unlimited value of your personal residence could be safe from creditors.

If you are the head of a household, then an unlimited amount of the wages you earn are exempt.

For a closely held business, then taking wages instead of dividends is a consideration.

Insurance and annuities, and the proceeds from them are exempt. With those financial products having such great tax benefits, knowing they are also safe from legal plunderers makes them the go-to investment alternative for business, estate, and retirement planning.

What about specific retirement plans?

ERISA plans (employer-provided retirement plans) are protected throughout the United States by federal law.

And some states, like Florida, provide additional exemptions for self-funded plans like IRAs and certain tuition programs like 529 plans.

Working with exemptions is tricky as is everything involved in creditors and the legal system.

Do-it-yourself plans available through the internet are a bad idea. Use a good lawyer instead. After all, it’s your entire financial future on the line.

For assuring you a safe and secure financial, using the exemption statutes to protect assets from creditors is a key tactic for every effective wealth protection strategy.

Denis Kleinfeld is known as a strategic tax and wealth protection lawyer, widely published author and creative teacher.

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Being Exempt From Creditor Assets Is the Key to Financial Security
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Monday, 09 April 2018 08:05 AM
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