Asset Protection Laws by State

Asset protection laws in the United States are almost entirely state-specific. Homestead exemptions, wage garnishment limits, entity protections, insurance exemptions, and forms of marital ownership all vary so dramatically that the same person with the same assets can be fully protected in one state and fully exposed in another.

Federal law creates a baseline for retirement accounts and wage garnishment, but state law controls everything else. Asset protection planning starts with understanding what a person’s home state does and does not protect, because state exemptions determine how much protection is already built into the law before any trust, LLC, or other structure is added.

	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

Homestead exemptions protect equity in a primary residence from judgment creditors, and the range across states is enormous. Seven states—Florida, Texas, Arkansas, Iowa, Kansas, Oklahoma, and South Dakota—protect unlimited home equity, meaning a creditor cannot force the sale of a homestead regardless of its value. New Jersey and Pennsylvania provide no general homestead exemption from creditors at all.

A physician who owns a $3 million home outright in Florida or Texas has that entire value protected from a malpractice judgment. The same physician in Wyoming, where the exemption caps at $40,000, would have $2,960,000 exposed. Among the unlimited-value states, 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 200 acres for a family in rural areas, far more generous than Florida’s half-acre urban limit.

Most states fall between the extremes. California’s cap ranges from roughly $300,000 to $600,000 depending on county median home prices. Nevada caps its exemption at $605,000. New York’s cap varies by county, from approximately $89,375 to $179,975. In all capped states, a creditor can force the sale of a home and take everything above the exempted amount.

A constitutional homestead exemption is harder to eliminate than a statutory one. Florida’s and Texas’s protections are constitutional, meaning the legislature cannot reduce them without amending the state constitution. Statutory exemptions in most other states can be reduced or eliminated by a simple legislative vote.

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 wages 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 federal floor.

Florida’s head-of-household exemption is among the strongest conditional wage protections 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 waive it.

New York protects 90% of wages, making it one of the strongest states for wage earners despite weak protections elsewhere. Garnishment laws vary widely by state, with some states offering additional hardship exemptions and protections for people receiving public assistance.

Personal Property and Bank Account Exemptions

Retirement accounts receive the broadest and most uniform protection. ERISA-qualified plans (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 without any dollar cap, while others impose limits or restrict protection to amounts reasonably necessary for support. Florida protects all IRA types, including inherited IRAs, without any dollar cap, making it one of the strongest IRA protections in the country.

Life insurance cash values and annuities are another major dividing line. Florida and Texas protect these assets without any dollar limit. In states without unlimited protection, the cash value inside a life insurance policy or annuity can be seized by a judgment creditor, which makes these tools unreliable for asset protection.

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.

One distinction that most states miss: whether wage exemptions carry forward into bank accounts after deposit. Florida extends wage-exemption protection for six months after deposit, even if wages are commingled with other funds. Most states do not carry wage exemptions forward, so protected wages lose their exempt status the moment they hit the bank account. That single difference can determine whether a creditor reaches a person’s entire liquid savings or nothing at all.

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 membership interest or force a dissolution.

Wyoming and Nevada provide the strongest LLC creditor protections. Both states make the charging order the exclusive remedy and extend that 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. The fix is adding a second member, typically an irrevocable trust, to invoke the multi-member charging order protection.

California, New York, and most other states do not limit creditors to the charging order. In those 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. The difference between exclusive-remedy and non-exclusive-remedy states determines whether an LLC provides real asset protection or merely a 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.

Most TBE states limit the protection to real estate. 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. Florida is one of only a few states that extends TBE protection to all property types, including real estate, bank accounts, brokerage accounts, and personal property.

A judgment against one spouse in Florida 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.

California, Texas, and most community property states do not recognize tenancy by the entirety at all. Married couples in these states cannot use joint ownership to shield assets from one spouse’s individual creditors, which eliminates one of the most practical and cost-free asset protection tools available elsewhere.

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 resident of a non-DAPT state who creates a Nevada DAPT may find that their home-state court refuses to apply Nevada law and instead applies local 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.

Even in states that have enacted DAPT statutes, the protection remains largely untested. Most DAPT statutes have limited or no case law confirming they work as intended against a determined creditor. Federal bankruptcy creates additional risk: a bankruptcy trustee can reach DAPT assets transferred within ten years before filing under § 548(e)(1), regardless of what the state statute says.

For residents of non-DAPT states—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 does not eliminate the federal bankruptcy exposure or the uncertainty of untested statutes. The best states for asset protection trusts each have distinct statute terms, lookback periods, and exception creditors, but none of them solve the structural problems that apply to every DAPT.

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?

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

Texas is the closest competitor. It offers an unlimited homestead with more generous acreage, a 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 strongest for entity-based and trust-based planning. Both offer charging-order-exclusive-remedy protection for all LLCs including single-member entities, and both have 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.

State-level protections, even in the strongest states, have a ceiling. Homestead exemptions protect only a home. Wage protections only last until the money is spent or deposited. LLCs remain subject to U.S. court authority. For people whose assets exceed what state exemptions can cover, or who live in a state with weak protections, offshore asset protection trusts provide protections that no domestic law in any state can match.

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.