Assessing Your Risk
How much do you have on the line if you were to be sued? Here’s how to quickly add up what you look like to a legal opponent. Take our two-minute asset protection risk assessment and weigh that in with your risk profile to determine whether or not you should seek legal protection of your wealth.
In order to have the most accurate assessment, one should be familiar with the laws in his or her state or consult with an experienced professional who can offer guidance.
Family Home / Primary Residence
First determine the equity by assessing the quick-sale market value of the home minus the loan balance. Then check with your state to see what your homestead exemption is. That is the amount of equity that is protected in a lawsuit. This can range from nothing, such as Pennsylvania, to everything, such as Texas (except in bankruptcy), each state is different.
A $1 million home with $725,000 of equity in California has $75,000 protected by the state of California homestead exception laws for single individuals and $100,000 for married or single parents – this asset has $650,000 within a lawsuit’s reach.
Additional Homes / Properties
Perform an equity check by assessing the value and deducting the loan amount. If there’s income on the property, that is another asset.
An investment property worth $700,000 with a $400,000 loan that produces $90,000 in income per year would be several hundred thousand dollars in assets to satisfy a judgment.
Add up the value of the bank accounts, cash on hand, wholesale value of all equipment and furniture as well as other assets, then subtract the liabilities, lease penalties and property wind-down costs.
Add up your cash, savings, bonds, retirement accounts and investments, then deduct any fees/penalties for liquidating. In some states IRAs and pension funds are fully or partially protected.
Add up the wholesale value, minus loan or lease amounts on any toys, cars, RVs, boats, planes, jewelry, guns, coins, etc., less any loans.