California Asset Protection
Asset Protection in California
California protects less than most people assume. There is no California asset protection trust, self-settled trusts fail here by statute, and the 2025 changes to the retirement exemption stripped away protection owners had counted on for decades. What California does give you is a strong homestead, a workable charging order, and a set of structures that hold up if you build them before a claim exists.
By Jacob Stein · Last updated August 18, 2026
Start with what the exemptions actually cover
Every asset protection conversation in this state starts with the exemption statutes, because those are the assets a judgment creditor cannot touch no matter how good the lawyer on the other side is. The homestead is the big one. Under Code of Civil Procedure section 704.730 it shields the equity in your principal residence up to your county’s prior-year median sale price, with a statewide ceiling of $743,681 for 2026 and a floor a little over $370,000, both indexed annually to the California Consumer Price Index. Everything above your county figure is exposed.
The rest of the list is thin. Seventy-five percent of wages paid in the thirty days before a levy, roughly $8,600 of equity in a vehicle, ordinary household goods, and a handful of insurance and public benefit categories. The Judicial Council publishes the current dollar amounts on form EJ-156 and adjusts them every three years, most recently on April 1, 2025. If you have a business, a portfolio, or real estate beyond your home, the exemptions will not carry you. That is the gap planning is for. If you want to walk through your own balance sheet, schedule a consultation.
The second thing to understand is timing. California’s Uniform Voidable Transactions Act, Civil Code section 3439.09, gives a creditor four years to unwind a transfer made to defeat a claim, or one year from discovery, with a seven-year outside limit. That window is why planning done while everything is calm works and planning done after a demand letter usually doesn’t.
Why California has no asset protection trust
Nineteen states let you create a trust, name yourself as a beneficiary, and keep creditors out of it. California is not one of them, and it is not close. Probate Code section 15304 says that if you are the settlor and a beneficiary of your own trust, the spendthrift restraint is invalid against your creditors, and they can reach the maximum the trustee could pay you. A revocable living trust does nothing at all on this front. It is an estate planning document, useful for probate avoidance and worthless against a lawsuit.
This is why California residents who need real protection end up looking outside the state or outside the country. A Nevada or South Dakota trust funded by a California resident is subject to a real choice-of-law fight in a California court, and no appellate decision has settled it in the client’s favor. Offshore structures avoid that fight by putting the trustee somewhere a California judgment does not run. Both routes have costs and both have honest limits, and any lawyer who tells you otherwise is selling.
What actually works here
Layering is the practical answer. Entities to separate operating risk from investment assets, with the charging order under Corporations Code section 17705.03 as the creditor’s remedy against a membership interest. Exempt assets used deliberately rather than by accident. Equity stripping on real estate where the homestead runs out. Marital property agreements where community property doubles the exposure, because under Family Code section 910 the entire community estate answers for a debt either spouse incurs. And where the numbers justify it, a foreign trust as the outer layer.
None of that is exotic. It is the same toolkit every serious practitioner uses. What separates plans that hold from plans that collapse is sequencing, documentation, and whether the structure was built before the claim arose. Read our page on lawsuit protection for how these pieces fit together, and our overview of the Intelligent Wealth Trust for the structure we use most often with California families.
Common questions
Not self-settled ones. Probate Code section 15304 makes the spendthrift clause invalid against your own creditors when you are both settlor and beneficiary. Trusts you create for someone else, funded while you are solvent, do protect that beneficiary. For your own assets, California residents use out-of-state or offshore trusts, and each carries a choice-of-law risk worth discussing before you fund it.
Home equity up to your county’s median sale price, capped at $743,681 in 2026 under CCP section 704.730. Seventy-five percent of recent wages. About $8,600 of vehicle equity. Household goods, tools of the trade, most life insurance cash value within limits, and public benefits. ERISA-qualified plans remain protected under federal law. Nearly everything else is fair game to a judgment creditor.
Less than they were. AB 2837, effective January 1, 2025, rewrote CCP section 704.115 so that IRAs, self-employed plans, and most 403, 414, and 457 arrangements are exempt in state court only to the extent a judge finds them reasonably necessary for your retirement. Employer plans governed by ERISA still have federal anti-alienation protection. Most content online still describes the old law.
No. You keep the power to revoke, so the law treats the assets as yours. A living trust avoids probate and controls distribution at death. It provides zero protection from a lawsuit during your life, and this is the single most common misunderstanding we correct in first meetings.
Sometimes, but the options narrow fast. Civil Code section 3439.09 lets a creditor unwind transfers made to hinder or delay them for four years, so moving assets after a claim exists invites a voidable transfer action and, in bad cases, a fraud allegation. What still works after a claim: using exemptions correctly, settling from protected positions, and structuring future income. What does not: quietly retitling the house.
Yes, when it is done before a creditor has a claim and reported honestly. The line is fixed by the voidable transaction statutes, not by anyone’s marketing. Planning that reduces your exposure to future claims is ordinary, lawful, and something most sophisticated families do. Planning designed to defeat a creditor who already exists is a different thing entirely and the courts treat it that way.
It depends on the structure and the balance sheet. Simple entity work runs a few thousand dollars. A layered domestic plan runs into five figures. A foreign trust with an institutional trustee costs more to establish and carries annual trustee and compliance fees. Anyone quoting a flat price before seeing your assets is selling a product, not designing a plan.
If you live in California and own more than the exemptions cover, the right time to look at this is now, while the calendar is still on your side. Call Aliant, LLP at 818-933-3838 or request a consultation and bring a one-page list of what you own and how it is titled. Related reading: how to protect your home from a lawsuit and transmutation agreements for California couples.