California Asset Protection Case Law: Decisions on Homestead, Retirement Plans, Community Property, and Fraudulent Transfers

This page analyzes the most important California court decisions on asset protection: the two homestead exemptions, the two exemption systems, wages and bank accounts, retirement plans and life insurance, community property, the charging order, fraudulent transfers, and spendthrift trusts.

What the Automatic Homestead Protects

A California homestead protects the owner who lives in the home from a forced sale on a money judgment, and residence rather than title is the test.

Broadway Foreclosure Investments, LLC v. Tarlesson, 184 Cal. App. 4th 931 (Cal. Ct. App. 2010). Leading case. A debtor deeded her home to a cousin to arrange financing and took it back eight months later. She kept the exemption, the court held. “There is no requirement in section 704.710 that the judgment debtor continuously own the property.” Debtors who keep living in the home “retain a sufficient equitable interest in the property to claim a homestead exemption.” 184 Cal. App. 4th at 937.

Amin v. Khazindar, 112 Cal. App. 4th 582 (Cal. Ct. App. 2003). The two systems stated. The declared homestead “provides greater rights than the automatic homestead,” while “the automatic homestead only entitles the debtor to protection from a forced execution sale.” 112 Cal. App. 4th at 588. The holding was procedural. A homestead claim not raised in an earlier partition action was barred, because the debtor could not “hijack the forced sale” after the fact. Id. at 591.

Spencer v. Lowery, 235 Cal. App. 3d 1636 (Cal. Ct. App. 1991). The automatic exemption does not reach the surplus from a lender’s foreclosure. Section 704.720(b) protects proceeds only when the home is “sold under this division,” meaning a sale to enforce a money judgment. Proceeds of a lender’s trustee sale, the court held, “are not exempt from execution to satisfy a money judgment.” 235 Cal. App. 3d at 1639. The court declined to follow a federal bankruptcy panel that read the statute more broadly.

Wolfe v. Jacobson (In re Jacobson), 676 F.3d 1193 (9th Cir. 2012). The six-month reinvestment condition applies in bankruptcy. Exemptions are fixed at the petition date, but “it is the entire state law applicable on the filing date that is determinative,” and California’s law includes the reinvestment requirement. A debtor whose home was sold during the case and who did not reinvest within six months lost the exemption in the proceeds. 676 F.3d at 1198.

Barclay v. Boskoski, 52 F.4th 1172 (9th Cir. 2022). In a bankruptcy lien-avoidance case, the court applied the California exemption in force on the petition date, not the amount in force when the lien was recorded. The debtor avoided the whole of a 2014 lien on the 2021 figure. Owen v. Owen controlled the outcome, and the panel distinguished Jacobson without overruling it.

Berhanu v. Metzger, 12 Cal. App. 4th 445 (Cal. Ct. App. 1992). Outside bankruptcy, the exemption is the amount in force when the creditor’s lien was created, not the amount in force at the sale. 12 Cal. App. 4th at 447. The court applied section 703.050(a) as written and distinguished earlier decisions that had measured the exemption at the time of sale.

Code of Civil Procedure section 704.730 sets the exemption at the county’s median home price within a band the statute indexes each year. Any dollar amount in a decision before 2021 is a figure the 2020 amendment repealed. Outside bankruptcy, section 703.050(a) fixes the amount as of the date the creditor’s lien was created. The California homestead chart carries the current figures.

A court orders the sale of a California homestead only where a bid would clear every lien and the exemption, and a judgment creditor whose sale fails is barred from another sale order for a year.

What the creditor seeks	Reaches a California homestead?	Authority
A forced sale on a money judgment, up to the exemption	No	§ 704.720; Amin (Cal. Ct. App. 2003)
A judgment lien on the home	Yes, it attaches to the equity above the exemption and to a retained equitable interest	Smith v. Merrill (Cal. Ct. App. 1998); Schroeder (Cal. Ct. App. 2009)
The surplus from a lender’s foreclosure, automatic homestead only	Yes	Spencer (Cal. Ct. App. 1991)
The surplus from a lender’s foreclosure, declared homestead recorded first	No, up to the exemption	Pearson (Cal. Ct. App. 2005)
Sale proceeds not reinvested within six months	Yes, in bankruptcy	Jacobson (9th Cir. 2012)
The exemption amount in bankruptcy	Measured at the petition date	Barclay (9th Cir. 2022)
The exemption amount outside bankruptcy	Measured when the lien was created	§ 703.050(a); Berhanu (Cal. Ct. App. 1992)

The Declared Homestead

A recorded homestead declaration adds protection the automatic exemption lacks, and the difference shows up when a lender forecloses.

Smith v. James A. Merrill, Inc., 64 Cal. App. 4th 94 (Cal. Ct. App. 1998). A judgment lien reaches a declared homestead only in the surplus over prior encumbrances and the exemption, and it does so when the abstract is recorded. Section 704.950(c) “does not govern when a judgment lien attaches to a declared homestead, but rather governs only the amount of the lien.” 64 Cal. App. 4th at 100. The court declined to follow a Ninth Circuit decision holding that no lien attaches until surplus equity exists.

Title Trust Deed Service Co. v. Pearson, 132 Cal. App. 4th 168 (Cal. Ct. App. 2005). Leading case. Where a declared homestead was recorded before the abstract of judgment, the exemption is part of the formula that fixes the judgment lien’s share of a trustee’s sale surplus. Spencer did not control, because that debtor had only the automatic exemption. 132 Cal. App. 4th at 178. On the same facts, recording the declaration changed the outcome.

Sections 704.910 through 704.960 of the Code of Civil Procedure govern the declaration. Section 704.950 keeps a judgment lien off a declared homestead recorded before the abstract, except in the equity left after prior encumbrances and the exemption. A support judgment is outside that rule. The pre-1982 rule that no judgment lien could ever attach ended with the current enforcement statute, so the older decisions on that point no longer state the law. Section 704.965 measures the exemption by the amount in force when the creditor obtained its lien.

The Two Exemption Systems in Bankruptcy

California has opted out of the federal exemptions, so a bankruptcy debtor chooses between the general exemptions and a bankruptcy-only set, and married debtors filing together get one set.

Little v. Reaves (In re Reaves), 285 F.3d 1152 (9th Cir. 2002). The “but not both” rule bars only concurrent use of the two sets once a petition is filed. A debtor who claimed the general exemptions against a pre-bankruptcy levy could still elect the bankruptcy-only set after filing. 285 F.3d at 1155. Election of remedies did not apply, because the two claims rested on different facts.

Talmadge v. Duck (In re Talmadge), 832 F.2d 1120 (9th Cir. 1987). Spouses who file jointly get one set of California exemptions. Section 703.110, which governs spouses, “effectively modifies section 703.140 and provides married debtors with unambiguous notice that they will be limited to a single set of exemptions.” 832 F.2d at 1124. The court rejected vagueness, equal protection, and Supremacy Clause challenges. Every dollar figure in the opinion is superseded.

Section 703.130 of the Code of Civil Procedure is the opt-out. Section 703.140(b) is the bankruptcy-only set, the only one with a general wildcard. The California appellate courts have not construed the election, because it exists only in bankruptcy.

Wages, Paid Earnings, and Bank Accounts

California protects part of a paycheck from garnishment and a floor amount in a deposit account, and paid earnings lose their exemption thirty days after payment.

Sourcecorp, Inc. v. Shill, 206 Cal. App. 4th 1054 (Cal. Ct. App. 2012). Leading case. A debtor held $125,000 in a home safe to keep it out of a bank. He could not trace it back to the wage exemption. The exemption covers only earnings paid “during the 30-day period ending on the date of the levy.” 206 Cal. App. 4th at 1058. Tracing is “[s]ubject to any limitation provided in the particular exemption.” Id. After thirty days, “the remainder becomes available to satisfy the debtor’s outstanding obligation.” Id. at 1061.

Greely v. Greely, No. D085527 (Cal. Ct. App. May 20, 2026). A creditor may levy a spouse’s separately held bank accounts without a court order. Section 700.160(b)(2) excepts accounts “standing in the name of” the judgment debtor’s spouse where an affidavit of the marriage is delivered with the levy. On that affidavit alone, more than $380,000 in savings and retirement accounts the wife held alone or with her son went into the levy. The levies were quashed only because the marriage was bigamous and void, so the creditor had to seek a court order.

Code of Civil Procedure section 706.050 caps garnishment, and the limit was rewritten in 2023. Section 704.070 extends the garnishment protection to earnings already paid, for thirty days and no longer. Section 704.220 exempts a floor amount in a deposit account without any claim by the debtor. No decision construes that floor. The garnishment chart carries the current percentages and the floor.

What a California levy takes from a deposited paycheck turns on the thirty-day window and the day of service.

Retirement Plans and IRAs

California exempts an employer’s retirement plan in full and an IRA only as far as support requires, and the IRA exemption must be claimed on time or it is lost.

Bagby v. Davis, No. B333649 (Cal. Ct. App. Feb. 17, 2026). Leading case. Its first holding is that the forum’s exemption law governs. “California law applies to collection actions in California courts, regardless of where the judgment debtor lives,” so a debtor who had moved to Florida could not claim Florida’s IRA exemption. A plan claimed under the private-retirement-plan exemption “must at least be a retirement plan,” one designed and used principally for retirement. The debtor bears the burden. A two-trustee law-firm plan holding one life policy, borrowed against, did not qualify.

Coastline JX Holdings LLC v. Bennett, 80 Cal. App. 5th 985 (Cal. Ct. App. 2022). An ERISA plan is exempt from levy without any claim of exemption, and a missed claim deadline does not forfeit it. Federal law makes the plan’s benefits non-assignable, section 695.030 puts non-assignable property outside the enforcement law, and section 704.210 exempts such property “without making a claim.” The court did not reach ERISA preemption. The same debtor’s SEP-IRA went to the creditor, because his claim of exemption missed the deadline and the sheriff returned it unprocessed.

Yaesu Electronics Corp. v. Tamura, 28 Cal. App. 4th 8 (Cal. Ct. App. 1994). A plan is exempt because of what it is used for, not what it is called. “Without regard to its label, a plan not used and designed for retirement purposes is not a retirement plan.” 28 Cal. App. 4th at 13. A defined-benefit plan built for tax deferral and a gift to the debtor’s sons was not exempt, so the gift of its proceeds a month after a $2.2 million verdict was a fraudulent conveyance.

Schwartzman v. Wilshinsky, 50 Cal. App. 4th 619 (Cal. Ct. App. 1996). The debtor must prove with evidence that the IRA is necessary for support. A stockbroker earning $476,000 filed no financial statement and failed to prove his IRA necessary for support. The size of the judgment against him did not prove it. 50 Cal. App. 4th at 626. An employer-administered 401(k) is a fully exempt private retirement plan, employee contributions included. Id. at 628.

McMullen v. Haycock, 147 Cal. App. 4th 753 (Cal. Ct. App. 2007). A rollover IRA traced to a private retirement plan keeps the full exemption. The funds, the court held, “retained their full exemption under section 704.115, subdivisions (b) and (d) after being rolled over into the IRA.” 147 Cal. App. 4th at 760. A Central District bankruptcy court had applied the limited IRA exemption to rollovers, and O’Brien agreed in 2019 that it “was wrongfully decided.” 38 Cal. App. 5th at 564. Bagby adds that the source plan must be a real retirement plan.

O’Brien v. AMBS Diagnostics, LLC, 246 Cal. App. 4th 942 (Cal. Ct. App. 2016). A section 529 college savings account is not exempt from levy in California. Section 704.115 does not reach such accounts, which “are designed and used for educational purposes, not retirement purposes.” 246 Cal. App. 4th at 947. The support test for an IRA weighs seven factors, current income among them. A trial court that refused to weigh the debtor’s current salary applied the wrong standard, and the error was not harmless for a healthy debtor years from retirement. Id. at 950-51.

O’Brien v. AMBS Diagnostics, LLC, 38 Cal. App. 5th 553 (Cal. Ct. App. 2019). The same debtor’s later appeal. Eighteen days after losing an exemption fight, the debtor formed an LLC, gave it a 401(k) plan, and rolled his IRAs into it. He conceded that the plan existed to shield the money. The plan got no exemption, because a plan must be designed and used for retirement as of the levy. The court then traced the funds back under McMullen and remanded to decide what part of the source IRAs was exempt.

Cunning v. Rucker (In re Rucker), 570 F.3d 1155 (9th Cir. 2009). Leaving the money untouched does not save a plan. The absence of loans or withdrawals “does not in itself guarantee that the plan was designed and used primarily for retirement.” 570 F.3d at 1161. A debtor who overfunded his one-man corporate plans past the federal limits and understated his contributions to the IRS lost the exemption, though he had never drawn on them. Overfunding, contributions out of line with the debtor’s wages, and the debtor’s credibility all count. Id. at 1162.

Code of Civil Procedure section 704.115 exempts private retirement plans in full, and IRAs only as far as support requires. A private retirement plan must come from an employer or an employee organization, as Simpson holds below. A 2024 amendment added a floor for personal debt tied to the federal IRA cap. No decision construes it, and the definition of personal debt it borrows excludes debts arising from tortious or fraudulent conduct. The IRA protection chart carries the figures.

A Californian’s retirement account and IRA protection stops at a plan that was never a retirement plan and at whatever an IRA holds above the judge’s support finding.

Life Insurance and Annuities

An unmatured life insurance policy is exempt as a policy, an annuity only where it is life insurance in substance, and once the owner cashes a policy in the money is protected only as support requires.

Bagby v. Davis (Cal. Ct. App. 2026). The only California appellate decision on a surrendered policy. “[I]f a life insurance policy is voluntarily surrendered, it is properly treated as having matured, and the exemption for unmatured policies no longer applies.” The debtor must then prove the money reasonably necessary for the support of himself, his spouse, or his dependents. The statute was written to stop a creditor from forcing a surrender, and once the owner surrenders voluntarily it has served its purpose.

Simpson v. Burkart (In re Simpson), 557 F.3d 1010 (9th Cir. 2009). Section 704.100 “applies categorically only to life insurance,” and “annuities are not included within the statute’s reach.” 557 F.3d at 1015. A single-premium annuity that guarantees an income stream, with no contingency that can divest the holder, is an investment. Id. at 1015-17. The same opinion confines section 704.115(a)(1) to plans an employer or employee organization established or maintains, not “arrangements by individuals.” Id. at 1018-19.

Estate of Short v. Payne (In re Payne), 323 B.R. 723 (B.A.P. 9th Cir. 2005). Risk alone does not make an annuity life insurance. A 78-year-old debtor claimed the monthly payments on a single-premium immediate annuity as matured life insurance, and the bankruptcy court stopped at the finding that she had bet on living ten years. Where the instrument “contains some attributes of insurance and some of investment,” the court must find its primary purpose, and “[i]f the primary purpose is investment, then the annuity would not qualify.” 323 B.R. at 730-31.

Code of Civil Procedure section 704.100 exempts an unmatured policy, with a loan-value figure the Judicial Council adjusts, and a matured policy’s proceeds as far as support requires. Its parenthetical naming endowment and annuity policies keeps a life insurance policy exempt when the policy carries those features, and it creates no exemption for annuities as a class. The life insurance chart carries the current figure.

Community Property and a Spouse’s Creditors

The whole community estate answers for either spouse’s debts in California, and no marital agreement is beyond the fraudulent transfer act.

Lezine v. Security Pacific Financial Services, Inc., 14 Cal. 4th 56 (Cal. 1996). Community liability “extends to debts incurred by one spouse alone exclusively for his or her own personal benefit.” 14 Cal. 4th at 64. A judgment lien recorded against community real property before a divorce survives the division. Id. at 65-66, 73-74. He forged her signature on a quitclaim deed and encumbered the house; voiding those deeds of trust left the debt standing, and the lender’s judgment became a lien on the house. Id. at 72.

Mejia v. Reed, 31 Cal. 4th 657 (Cal. 2003). Leading case. The fraudulent transfer act applies to transfers made in a marital settlement agreement. The Legislature did not intend “to grant married couples a one-time-only opportunity to defraud creditors by including the fraudulent transfer in an MSA.” 31 Cal. 4th at 668. Future child support is not a debt for the insolvency test. The opinion also states that “a debtor’s assets exclude property that is exempt from judgment enforcement.” Id. at 670.

Sturm v. Moyer, 32 Cal. App. 5th 299 (Cal. Ct. App. 2019). A premarital agreement can be a voidable transfer. The act “can apply to premarital agreements in which the prospective spouses agree that each spouse’s earnings, income, and property acquired during marriage will be that spouse’s separate property.” 32 Cal. App. 5th at 315. The agreement takes effect on marriage, when each spouse acquires a community interest and at once transfers it. The other spouse’s earnings escape the debtor’s premarital debts only while kept uncommingled where the debtor cannot draw on them.

Family Code section 910 makes the whole community estate answer for debts of either spouse, whether incurred before or during the marriage. Section 911 shelters the non-debtor spouse’s earnings from the other spouse’s premarital debts while they stay segregated. Section 1000 sends a tort judgment to the community estate first when the spouse acted for the community. Section 916 keeps a pre-divorce lien on the property. Section 851 subjects a transmutation to the fraudulent transfer laws. A spouse’s separate accounts can be levied on an affidavit of the marriage, as Greely holds.

A creditor of one California spouse reaches both spouses’ marital earnings and, outside a debt for the necessaries of life, none of the other spouse’s separate property.

Charging Orders and Reverse Veil Piercing

California makes the charging order a judgment creditor’s only route to an LLC interest, then allows foreclosure and a receiver inside it. A creditor with alter-ego facts can go around the charging order altogether.

Curci Investments, LLC v. Baldwin, 14 Cal. App. 5th 214 (Cal. Ct. App. 2017). Leading case. A creditor may pierce a California LLC in reverse, from the outside, on the alter-ego factors plus proof that no adequate remedy at law exists. The creditor held charging orders that produced nothing, because the debtor controlled whether the LLC distributed. The debtor’s spouse, a one percent member, was not an innocent member, because under Family Code section 910 she was liable for the debt too.

Blizzard Energy, Inc. v. Schaefers (Cal. Ct. App. 2021). The Second District Court of Appeal endorsed Curci, a Fourth District decision. Under a heading reading “A Charging Order Is Not Respondent’s Exclusive Remedy,” the court rejected the argument that Curci was wrongly decided. “There is no reason to depart from its sound analysis.”

Medipro Medical Staffing LLC v. Certified Nursing Registry, Inc., No. B305910 (Cal. Ct. App. Feb. 4, 2021). The receiver limb has a limit. Appointing a receiver over LLC distributions on a money judgment is an abuse of discretion unless the debtor obstructed collection “through obfuscation or through otherwise contumacious conduct.” A receiver is “drastic,” to be “exercised sparingly,” and a slowdown in distributions without proof the debtor engineered it is speculation.

Section 17705.03 of the Corporations Code gives the creditor a charging order, allows a receiver of distributions, and allows foreclosure once it is shown that distributions alone will not pay the debt within a reasonable time. It calls the charging order the exclusive remedy. The text does not distinguish by the number of members. No decision addresses whether a single-member LLC gets the protection at all. The charging order chart compares the states.

A charging order against a California LLC can be foreclosed at any member count, and a receiver over the distributions requires proof that the member obstructed collection.

Fraudulent Transfers and Exempt Property

California’s Uniform Voidable Transactions Act reaches every transfer, marital agreements included, but a transfer of exempt property injures no creditor and stands.

Fidelity National Title Ins. Co. v. Schroeder, 179 Cal. App. 4th 834 (Cal. Ct. App. 2009). Leading case. Injury in fact is an element. Because the automatic homestead is an exemption, a dwelling with no equity above the encumbrances and the exemption is not an “asset.” Its transfer stands even on a finding of intent to defraud. 179 Cal. App. 4th at 845. A resulting trust reaches the equitable interest the transferor kept, and a judgment lien attaches to that interest from the date the abstract was recorded. Id. at 847.

PGA West Residential Ass’n, Inc. v. Hulven International, Inc., 14 Cal. App. 5th 156 (Cal. Ct. App. 2017). The seven-year deadline in the act extinguishes the claim itself. The court called it “a substantive statute of repose that completely extinguishes a right or obligation.” It “cannot be tolled or otherwise extended,” and such a statute “is not subject to forfeiture.” A creditor who sued after seven years had its rights “completely extinguished.” A debtor who recorded a deed of trust favoring a sham corporation, insulating his equity, made a transfer under the act.

Potter v. Alliance United Insurance Co., 37 Cal. App. 5th 894 (Cal. Ct. App. 2019). The repose holding stops at the seven-year limb. The court refused to read PGA West as declaring “either subdivisions (a) or (b) statutes of repose,” so the four-year period and the one-year discovery limb remain ordinary limitations periods. The four-year period is still tolled until the underlying judgment becomes final under Cortez v. Vogt, a 1997 decision no California court has disagreed with.

Wolkowitz v. Beverly (In re Beverly), 374 B.R. 221 (B.A.P. 9th Cir. 2007). Converting non-exempt property into exempt property is never an exchange for reasonably equivalent value. Everything then turns on intent. 374 B.R. at 244. A lawyer facing a malpractice judgment swapped, in a divorce settlement, his community cash for his wife’s share of his exempt pension, “a paradigm case of actual intent.” Id. at 227. The Ninth Circuit adopted the opinion on the transfer. 551 F.3d 1092 (9th Cir. 2008).

The act applies to a marital settlement, a premarital agreement, and a retirement-plan gift alike. Section 3439.01(a)(2) of the Civil Code excludes exempt property from “assets.” Section 3439.09 sets the four-year limit, the one-year discovery limb, and the seven-year deadline, and only the seven-year limb is repose. Optional Capital, Inc. v. Akin Gump, 18 Cal. App. 5th 95 (Cal. Ct. App. 2017), threw out a creditor’s claim against two law firms under the litigation privilege, and it sits with the other lawyer liability decisions.

Self-Settled and Spendthrift Trusts

A California spendthrift trust protects a beneficiary someone else provided for, within limits the California Supreme Court has drawn. A trust the debtor settled for himself gives no protection.

Carmack v. Reynolds, 2 Cal. 5th 844 (Cal. 2017). Leading case. The Ninth Circuit certified the question. A general creditor “may reach a sum up to the full amount of any distributions that are currently due and payable to the beneficiary.” The creditor may separately reach up to 25 percent of anticipated payments. 2 Cal. 5th at 848. The 25 percent cap does not limit the first amount. Distributions the instrument specifies for support or education are excepted to the extent needed.

In re Witwer, 148 B.R. 930 (Bankr. C.D. Cal. 1992). Section 15304 invalidates the spendthrift clause but not the exemption. A physician’s corporate profit-sharing plan, with him as sole shareholder and participant, was not a valid spendthrift trust, because he controlled it. 148 B.R. at 937. The plan was fully exempt anyway under section 704.115, because it was designed and used for retirement. Id. at 939. The court said the remedy for that result “is for the state legislature.” Id. at 941.

Ehrenberg v. Southern California Permanente Medical Group (In re Moses), 167 F.3d 470 (9th Cir. 1999). A medical group set up a retirement plan for its partner physicians, and the plan was a valid spendthrift trust under California law. Because someone other than the debtor created it, his interest never entered the bankruptcy estate.

Section 15304 of the Probate Code makes a spendthrift restraint invalid as to a settlor who is also a beneficiary, so California is not a domestic asset protection trust state. Section 15301(b) reaches distributions currently due, and section 15306.5 reaches 25 percent of future payments. A spendthrift trust works in California only where someone other than the beneficiary created and funded it.

California planning starts from what these rules leave exposed, which is the whole community estate, an IRA beyond what support requires, and deposits above the automatic floor.