The State of Texas has very generous debtor protection laws. As most know, we are the only state that provides an unlimited homestead exemption. There are many other exemptions, and with expert legal planning, you can protect almost all your assets!
As but one example, it is important to understand the difference between community property and marital debts. Property accumulated during a marriage is community, regardless of how titled. A car purchased during marriage by the husband, for example, is considered half of the wife’s property as well. The same is not true for debts acquired during marriage. If debts are acquired in the name of the husband, these are not the debts of the wife.
Although the rules to explain creditors’ rights are complex, there is a substantial planning opportunity to protect marital assets if one spouse is obligated on debts that the other is not. This often happens when credit cards are issued in the name of one spouse or business obligations are incurred only in the name of one spouse. In these circumstances, a couple can protect their most vulnerable assets by planning in advance and segregating the vulnerable asset from the indebted spouse’s creditors.
Pyke & Associates is an experienced estate planning firm in Dallas, and a fundamental part of estate planning is to make sure your assets are held in a way that protects them from a variety of risks, including death, incapacity, long-term health care costs, and economic downturn. Contact us today to help you review your assets to make sure you have maximized your protection.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, specific tax, legal or accounting advice. We can only give specific advice upon consulting directly with you and reviewing your exact situation.
