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Asset Armor: Protecting Your Wealth with Bernstein-Burkley’s Asset Protection Insights Blog #5

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Posted on July 26, 2023 by Victoria Davis

By Harry W. Greenfield 

July 26, 2023

A series of blogs on Asset Protection….

Blog #5

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When working with a client to protect their assets, exemption planning is important.  For instance, in Ohio each spouse gets an exemption of $125,000 in real estate (plus the annual adjustment).  Therefore, a couple will receive $250,000, if the couple owns a home jointly.  If the home is worth $600,000 with a $350,000 mortgage, there is no equity which can be used by a judgment creditor.  In a bankruptcy, a nonconsensual lien, such as a judgment lien, is avoidable because it impairs the Debtor’s exemptions.  In a judicial foreclosure, the lien would be extinguished because all the funds would be paid first to costs, then to taxes, then to the first mortgage, and finally to the exemption, leaving no funds for the lien creditor.

A transfer to a spouse of an interest can be considered an avoidable transfer.  So, the proper time to consider having spouses hold the real estate jointly is at the time of the purchase.  If a transfer to the spouse is made, the transfer potentially is avoidable for whatever is the appropriate statute of limitations for a fraudulent conveyance.

When meeting with a client, consider what assets they own and what exemptions are available to the client.  Another consideration is to have the client move to another state with a better exemption statute and establish residency in that state.  In Florida for instance, there are several hoops that a party living in the state needs to jump through to become a resident of the state.  Some of these requirements include living in the state for the better part of one year, having a Florida driver’s license, voting in the state, etc.  However, if the client establishes that she is a resident, then the entirety of their real estate holdings will be exempt.

Getting ahead of a potential problem can give your client better than a fresh start from bankruptcy.

We have more to say about Asset Protection Planning in our next post or podcast.  Stay tuned…

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Previous Blogs:

Asset Armor: Protecting Your Wealth with Bernstein-Burkley’s Asset Protection Insights Blog #1

Asset Armor: Protecting Your Wealth with Bernstein-Burkley’s Asset Protection Insights Blog #2

Asset Armor: Protecting Your Wealth with Bernstein-Burkley’s Asset Protection Insights Blog #3

Asset Armor: Protecting Your Wealth with Bernstein-Burkley’s Asset Protection Insights Blog #4

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