Protecting Your Assets

In Fort Collins there are people who are concerned about protecting their investments and savings from lawsuits in the event that they suffer some misfortune, such as a business failure, accident, poor health, etc.  Some of these people may create trusts, corporations, or limited liability companies to try to hide their assets and otherwise make it more difficult for a potential creditor to get at their assets.

A far better and easier way is to create and own wealth in a retirement account such as an IRA or a 401K.  Colorado law protects such accounts.  Section 13-54-102 of the Colorado Revised Statutes states in part that:  (1) The following property is exempt from levy and sale under writ of attachment or writ of execution:

(s) Property, including funds, held in or payable from any pension or retirement plan or deferred compensation plan, including those in which the debtor has received benefits or payments, has the present right to receive benefits or payments, or has the right to receive benefits or payments in the future and including pensions or plans which qualify under the federal "Employee Retirement Income Security Act of 1974", as amended, as an employee pension benefit plan, as defined in 29 U.S.C. sec. 1002, any individual retirement account, as defined in 26 U.S.C. sec. 408, any Roth individual retirement account, as defined in 26 U.S.C. sec. 408A, and any plan, as defined in 26 U.S.C. sec. 401, and as these plans may be amended from time to time; 

In addition to protection from creditors through state court lawsuits, Colorado has also made such property exempt from claims in federal bankruptcy cases.

It is very easy to hold stock and bonds and other securities in these retirement accounts.  Through self directed IRAs real estate and most any other asset can also be held in an exempt retirement account.  The Roth accounts even allow for the tax free appreciation and growth of these investments.

So,  instead of trying to hide your investment under some other name or to try to make a creditor jump through hoops to get to your investments, it is a better idea to invest and own in a retirement account that is completely protected from creditors by Colorado law.

Posted on March 29, 2014 .