Author Topic: what assets are protected from legal action?  (Read 4971 times)

scrubbyfish

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what assets are protected from legal action?
« on: February 12, 2014, 10:52:56 AM »
Happily, I don't have a worrying situation at the moment, but sometimes life happens, so...

I have been told that my retirement investment is protected from an ex-spouse taking some of it in a divorce. (I don't have a spouse, nor an ex-spouse, so this isn't my concern, I'm simply trying to protect my assets from bad things.) What makes an asset protectable from ex-spouses, business lawsuits, whatever else? Besides retirement insurance policies, what other investment options are secure from others taking them?

What about the registered accounts (RRSP, RDSP, RESP)? Any other?
« Last Edit: February 12, 2014, 10:56:10 AM by scrubbyfish »

Cromacster

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Re: what assets are protected from legal action?
« Reply #1 on: February 12, 2014, 11:03:58 AM »
I believe it varies by state.  In MN, assets in retirement accounts are considered joint property if they were accumulated during the marriage.  Not to say you couldn't go after other retirement assests or use it against them in alimony or child support negotiations.

Not sure about other legal situations, being sued and what not.

xfactor9600

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Re: what assets are protected from legal action?
« Reply #2 on: February 12, 2014, 11:12:24 AM »
As a divorce attorney, your best asset protection in divorce is a well prepared prenuptial agreement. It may also make sense to sit down with a divorce attorney in your jurisdiction (I recommend someone certified by your state in family law or a member of the academy of matrimonial lawyers) and pay them for an hour of time to walk you through the various laws of your state. I do this quite frequently.

Mori

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Re: what assets are protected from legal action?
« Reply #3 on: February 12, 2014, 06:28:45 PM »
Who told you that your retirement account is safe?

I'm reasonably sure in my state that 401ks are split on divorce, but some pension accounts can't be touched.

I think your best bet would be to talk to a lawyer in your state about it. And prenups.

scrubbyfish

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Re: what assets are protected from legal action?
« Reply #4 on: February 12, 2014, 06:32:38 PM »
To be clearer: I'm not particularly worried about divorce, per se, as I have no spouse.

My question perhaps would better have been phrased this way:

"I understand that some assets are protected from some legal actions (business lawsuits, divorce, etc). How can I find out which investment options are protected and which are not?"

Mori

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Re: what assets are protected from legal action?
« Reply #5 on: February 12, 2014, 06:58:05 PM »
Hey Scrubbyfish,

My answer was to that question--I would rely more on an actual lawyer consult for something like this because the laws vary pretty widely across the country.

Although, it sounds like you are talking general asset protection. In that case, this site would be of use to you: www.assetprotectionsociety.org/state-asset-protection-laws/

The other thing is... you could find out all of this information and then they change the rules on you. :)

soccerluvof4

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Re: what assets are protected from legal action?
« Reply #6 on: February 13, 2014, 05:03:28 AM »
And no offense to Lawyers...but just because it says you have protection doesn't mean you wont go broke trying to fight a lawsuit.  In the business i own people are always suing and we are always spending $$ to win these frivolous lawsuits. Then if there are insurance companies involved (gun to head) yikes.  Pretty much goes with anything nowadays.  Get yourself a great attorney and a great accountant. Prenuptial s as well as non-competes as well always a battle. And eveyrone will say "No there really good if its written right" blah blah blah!

Undecided

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Re: what assets are protected from legal action?
« Reply #7 on: February 13, 2014, 08:55:40 AM »
And no offense to Lawyers...but just because it says you have protection doesn't mean you wont go broke trying to fight a lawsuit.  In the business i own people are always suing and we are always spending $$ to win these frivolous lawsuits. Then if there are insurance companies involved (gun to head) yikes.  Pretty much goes with anything nowadays.  Get yourself a great attorney and a great accountant. Prenuptial s as well as non-competes as well always a battle. And eveyrone will say "No there really good if its written right" blah blah blah!

Perhaps, but the more certain the protection, whatever it is, then the greater the odds that the "other" side won't feel it's worth its money to pursue it.

scrubbyfish

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Re: what assets are protected from legal action?
« Reply #8 on: February 13, 2014, 09:47:18 AM »
Thank you very, very much, everyone!

I now understand that what is protected is different in every region, and that my best course is to consult with legal sources relevant to my location (BC, Canada).

The assetprotection link helped, as it inspired me to look up its equivalent for BC. I will learn what I can online, then consult around the business aspect as needed. Thanks again, much appreciated!

foobar

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Re: what assets are protected from legal action?
« Reply #9 on: February 13, 2014, 10:06:08 AM »
OP is in Canada so it differs by province:)

In the USA, 401(k) are protected in bankruptcy. IRAs are not. Housed also tend to be protected but that varies based on the state.

Divorce is a heck of a lot more messy where pre marriage assets are often protected but commingle ones aren't. And you can't end up with a destitute spouse.

I believe it varies by state.  In MN, assets in retirement accounts are considered joint property if they were accumulated during the marriage.  Not to say you couldn't go after other retirement assests or use it against them in alimony or child support negotiations.

Not sure about other legal situations, being sued and what not.

beltim

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Re: what assets are protected from legal action?
« Reply #10 on: February 13, 2014, 10:15:25 AM »
In the USA, 401(k) are protected in bankruptcy. IRAs are not. Housed also tend to be protected but that varies based on the state.

Since 2005 IRAs have also been protected in bankruptcy.  See http://www.law.cornell.edu/uscode/text/11/522

Dezrah

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Re: what assets are protected from legal action?
« Reply #11 on: February 13, 2014, 12:28:39 PM »
I admit I can't really answer the OP's question, but I have an interesting tidbit that goes to the point.

I remember being told once by a doctor relative that, like all doctors, private practice doctors have to buy malpractice insurance, but since they were unaffiliated, they generally had less financial protection.  If they were found liable in a suit, their personal house and bank accounts were fair game for seizure.  The items inside the house, however, were not.  Therefore it was very common for these doctors to put a huge amount of their net worth in things like jewelry and artwork.  Ultimately this is either a sleazy or smart move depending on where you're standing.  I'm not sure whether this is still true or not and it probably varies by state anyway.
 

Mori

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Re: what assets are protected from legal action?
« Reply #12 on: February 13, 2014, 02:26:17 PM »

I now understand that what is protected is different in every region, and that my best course is to consult with legal sources relevant to my location (BC, Canada).


Whoops, assumed US by default! Glad it was at least a good lead.