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Asset Protection Under Arizona Law

Asset Protection Under Arizona Law

Our firm does estate planning. We draft Wills and Trusts. One of the questions we often field is “Does my Trust protect my assets from creditors”. The answer is that a standard revocable living trust is an estate planning instrument and does not provide significant asset protection for the Trustors.

What many people overlook is the significant asset protection afforded to all of us under Arizona Law. LLCs and Corporations are routinely used to limit liability. And ARS 33-1101 through ARS 33-1153 set forth lists of property in Arizona that is exempt from creditors. Use of these exemptions is no substitute for the customized asset protection strategies a specialist asset protection attorney can provide. But it is possible to arrange your affairs to shelter substantial assets through use of these exemptions. Some of the most significant are:

ARS 33-1101 provides a homestead exemption for up to $400,000.00 of house equity. This exemption continues in the sales proceeds of the home for a period of 18 months or until they are reinvested in a new home, whichever comes first.

ARS 33-1125 exempts specified items of personal property including one automobile with equity of up to $15,000.00.

ARS 33-1126 exempts specified money proceeds including:

  1. life insurance proceeds in the minimum amount of $20,000.00 up to the full policy value.
  2. Child Support.
  3. health, accident or disability insurance proceeds.
  4. cash surrender value of life insurance policies owned by the debtor for over two years.
  5. annuity contracts owned by the debtor for over two years.
  6. 529 college savings plan monies deposited in the plan for over two years.
  7. Retirement and deferred compensation plan monies.

ARE 33-1130 exempts tools of a trade, business or profession up to a value of $5000.00.

Some of these exemptions are limited to an amount certain. Significantly, others are not, including the retirement planning vehicles commonly used.

These exemptions do not provide protection from all creditors. There are exceptions. The most frequently mentioned exception is child support.

Our firm does not practice asset protection law. This is a specialty area. Where a need arises, we refer to specialist asset protection attorneys.

If you have questions about estate planning or trusts, you may schedule a complimentary conference with one of our experienced lawyers by filling out the form below or contacting any of our staff at 602-277-4441.

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