Asset Protection Laws by State

Asset protection laws vary dramatically across the United States. The legal tools available to protect wealth from creditors depend almost entirely on where a person lives, because state law controls homestead exemptions, wage garnishment rules, entity protections, and most other creditor-debtor rules.

Federal law sets a baseline for wage garnishment and retirement accounts, but state law determines everything else. State exemptions and entity protections form the foundation of any asset protection plan, but they have limits that only offshore structures can address.

Florida offers the strongest overall combination of asset protection laws in the country. No other state matches its unlimited homestead exemption, full tenancy by the entirety coverage on all property types, head-of-household wage exemption, and unlimited annuity and life insurance protections. Texas is the closest competitor, but it lacks tenancy by the entirety and has weaker entity protections.

A state’s strength depends on six categories: homestead exemptions, wage garnishment rules, personal property and bank account exemptions, LLC and charging order protections, tenancy by the entirety, and domestic asset protection trust availability. California has moderate homestead protection but no tenancy by the entirety and no DAPT statute. Nevada has strong LLC and trust laws but a capped homestead exemption.

	Florida	Texas	California	New York	Nevada	Wyoming
Homestead	Unlimited value	Unlimited value	Capped (~$300K–$600K)	Capped (~$89K–$179K)	Capped ($605K)	Capped ($40K)
Wage garnishment	Head-of-household exempt	Fully exempt	75% protected	90% protected	75% protected	75% protected
Tenancy by entirety	All property	Not recognized	Not recognized	Not recognized	Not recognized	Not recognized
LLC charging order	Exclusive remedy (multi-member)	Not exclusive	Not exclusive	Not exclusive	Exclusive remedy	Exclusive remedy
DAPT statute	No	No	No	No	Yes	Yes
Annuities/life insurance	Unlimited	Unlimited	Limited	Moderate	Moderate	Moderate

Homestead Exemptions

Florida’s homestead exemption protects 100% of the equity in a primary residence with no dollar cap. The protection covers properties up to half an acre within a municipality or 160 acres outside one. It is constitutional, meaning the legislature cannot reduce it. A creditor with a $10 million judgment against a Florida resident who owns a $5 million home cannot force the sale of that home.

Eight other U.S. jurisdictions also offer unlimited-value homestead exemptions: Texas, Arkansas, Iowa, Kansas, Oklahoma, South Dakota, the District of Columbia, and Puerto Rico. Among these, Florida and Texas have the strongest protections but differ in acreage limits and inheritance restrictions. Texas allows up to 10 acres in a city and 100 acres (200 for families) in rural areas, far more generous acreage than Florida’s half-acre urban limit.

Most states cap homestead protection at specific dollar amounts. California’s cap ranges from roughly $300,000 to $600,000 depending on county median home prices. New York’s cap varies by county, from approximately $89,375 to $179,975. Nevada caps its exemption at $605,000. Wyoming’s cap is $40,000, among the lowest in the country. In these states, a creditor can force the sale of a home and take everything above the exempted amount.

The practical effect is stark. A physician in Florida who owns a $3 million home outright has that entire value protected from malpractice creditors. The same physician in Wyoming would have $2,960,000 exposed.

Wage Garnishment Protections

Four states prohibit wage garnishment entirely for consumer debts: Texas, Pennsylvania, North Carolina, and South Carolina. In these states, a judgment creditor cannot touch a debtor’s paycheck regardless of income level.

Federal law sets the baseline everywhere else. A creditor can garnish the lesser of 25% of disposable earnings or the amount by which weekly pay exceeds 30 times the federal minimum wage ($7.25, producing a protected floor of $217.50 per week). Several states improve on this baseline with stronger protections.

Florida’s head-of-household exemption is among the most protective conditional wage exemptions in the country. A head of household—anyone who provides more than half the support for a child or dependent—earning $750 or less per week in net wages is fully exempt from garnishment. Even above that threshold, the exemption applies unless the debtor agrees in writing to allow garnishment. Garnishment laws vary widely by state, with some states offering hardship exemptions and others providing additional protections for people receiving public assistance.

New York protects 90% of wages from garnishment, making it one of the most protective states for wage earners even though its other exemptions are relatively weak.

Personal Property and Bank Account Exemptions

Retirement accounts receive the broadest protection. ERISA-qualified plans, including 401(k)s, pensions, and profit-sharing plans, are federally protected from creditors in all 50 states. IRAs receive varying levels of state protection. Some states protect IRAs fully, while others cap the exemption or limit it to amounts reasonably necessary for support.

Florida protects annuities and life insurance cash values without any dollar limit. It is one of only a handful of states with unlimited protection for these assets. Texas similarly provides unlimited annuity and life insurance protection. In states without these protections, the cash value inside a life insurance policy or annuity can be seized by a judgment creditor.

Bank account protections vary widely. Federal law requires banks to automatically protect two months of direct-deposited federal benefits (Social Security, VA benefits, federal retirement) from garnishment. Beyond that federal floor, state law controls. Some states prohibit bank account garnishment entirely for certain categories of funds, while others allow creditors to freeze and seize account balances with minimal notice.

Florida extends wage-exemption protection into bank accounts. Wages deposited by a head of household retain their exempt status for six months, even if commingled with other funds. Most states do not carry wage exemptions forward into bank accounts, so protected wages lose their exempt status the moment they are deposited.

LLC and Charging Order Protection

A charging order is a court-issued lien on a debtor’s distributions from an LLC. Instead of seizing the LLC’s assets or taking over management, the creditor receives only what the LLC chooses to distribute, if anything. In states where the charging order is the exclusive remedy, the creditor cannot foreclose on the LLC interest or force a dissolution.

Wyoming and Nevada provide the strongest LLC protections. Both states make the charging order the exclusive remedy available to a judgment creditor, and both extend this protection to single-member LLCs. Florida provides charging-order-exclusive-remedy protection for multi-member LLCs under § 605.0503, but a single-member LLC in Florida is vulnerable. In bankruptcy, a trustee can exercise the sole member’s management rights and liquidate the LLC’s assets, as the court held in In re Ashley Albright.

California, New York, and most other states do not limit creditors to the charging order. In these states, a court can order foreclosure on an LLC membership interest, giving the creditor full ownership rights, including the ability to vote, manage, and liquidate assets. The difference between exclusive-remedy and non-exclusive-remedy states can determine whether an LLC provides meaningful asset protection or merely a thin corporate formality.

Tenancy by the Entirety

Tenancy by the entirety is a form of joint ownership available only to married couples that shields assets from one spouse’s individual creditors. Roughly 25 states recognize tenancy by the entirety, but the scope of protection varies enormously.

Florida provides the strongest tenancy by the entirety protection in the country. The state extends TBE protection to all property types, including real estate, bank accounts, brokerage accounts, and personal property, and provides complete immunity from individual creditor claims. A judgment against one spouse cannot attach to any entireties asset. The only exceptions are joint debts owed by both spouses, federal tax liens under United States v. Craft, and fraud.

Most other TBE states limit the protection to real estate only. A married couple in Maryland or Virginia can hold their home as tenants by the entirety, but their bank accounts and investment accounts receive no TBE protection. This limitation makes TBE a partial strategy in most states and a cornerstone strategy only in Florida and a few others that extend it to personal property.

California, Texas, and most community property states do not recognize tenancy by the entirety at all. Married couples in these states have no form of joint ownership that shields assets from one spouse’s individual creditors.

Domestic Asset Protection Trusts

Nineteen states have enacted statutes allowing domestic asset protection trusts, which are self-settled trusts where the creator can also be a beneficiary while shielding assets from creditors. Nevada, South Dakota, Wyoming, Delaware, Ohio, and Tennessee are among the most commonly used DAPT jurisdictions.

The central weakness of every DAPT is the home-state recognition problem. A DAPT only works if the debtor’s home-state court applies the DAPT state’s law to the trust. A Florida resident who creates a Nevada DAPT may find that a Florida court refuses to apply Nevada law and instead applies Florida law—which does not recognize self-settled asset protection trusts. The creditor sues in the debtor’s home state, and the trust provides no protection at all.

Even in states that have enacted DAPT statutes, the protection is untested in most jurisdictions. Nevada and South Dakota have the most developed case law, but neither has a definitive appellate ruling confirming that the statute works as intended against a determined creditor. Federal bankruptcy creates additional risk: a bankruptcy trustee can reach assets transferred to a self-settled trust within ten years before filing under § 548(e)(1).

For residents of non-DAPT states—which is the majority of the U.S. population—a domestic asset protection trust is not a reliable strategy. For residents of DAPT states, it is better than nothing but ranks behind other strategies. An offshore trust operates outside the U.S. legal system entirely, removing federal bankruptcy jurisdiction, Full Faith and Credit conflicts, and reliance on untested state statutes.

Which State Has the Strongest Asset Protection Laws?

Florida combines more protective categories at the highest level than any other state. Its unlimited homestead exemption, head-of-household wage exemption, full tenancy by the entirety on all property types, charging-order-exclusive-remedy protection for multi-member LLCs, and unlimited annuity and life insurance exemptions create a level of built-in creditor protection that no other state matches.

Texas is the closest competitor. It offers an unlimited homestead exemption with more generous acreage allowances, full wage garnishment prohibition, and unlimited annuity and life insurance protection. Texas falls short in two areas: it does not recognize tenancy by the entirety, and its LLC protections are weaker than Florida’s or Wyoming’s.

Nevada and Wyoming are strong for entity-based and trust-based planning. Both offer charging-order-exclusive-remedy protection and DAPT statutes. Neither offers the personal exemption protections that Florida and Texas provide. Nevada’s homestead cap is $605,000, and Wyoming’s is $40,000.

California and New York are among the weakest states for asset protection. Both have capped homestead exemptions, no DAPT statutes, no tenancy by the entirety, and no exclusive charging order remedy. High-net-worth residents in these states face limited options under state law alone.

For people who do not live in a state with strong protections, or whose assets exceed what state exemptions can cover, offshore asset protection trusts provide protections that no domestic law in any state can match. An offshore trust places assets beyond the reach of U.S. courts entirely, regardless of which state the person lives in.

State-by-State Guides

California’s asset protection laws leave high-net-worth residents exposed in several categories. The state’s capped homestead, absent tenancy by the entirety, and lack of a DAPT statute make it one of the weaker states for creditor protection.

New York asset protection relies heavily on its strong wage garnishment protections but offers little else. Homestead caps are low, LLC protections are limited, and no self-settled trust statute exists.

Texas offers the second-strongest set of asset protection laws in the country, with an unlimited homestead and full wage garnishment prohibition, though it lacks tenancy by the entirety and has no DAPT statute.