New York Asset Protection: Protect Your Assets from Creditors, Lawsuits & Financial Disruptions

In New York, protecting your assets isn’t just about preserving wealth; it’s about planning wisely, legally, and ahead of time. Whether you’re concerned about future lawsuits, long-term care costs, or passing your estate to loved ones, the right strategies can make all the difference for your family’s future.

At the Law Office of Inna Fershteyn, our New York asset protection team helps high-net-worth individuals design customized strategies—trusts, LLCs, gifting plans and more—to shield wealth from creditors, lawsuits, and long-term care costs. Below are asset preservation planning strategies we have used for over twenty years, helping thousands of clients. When you work with our office, you receive individualized attention and you will work directly with our principal attorney who has received over 260 5-star reviews.

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When you plan ahead, you can rest easy knowing your estate will pass intact to your heirs. To speak with an attorney, call our office at (718) 333-2395. For detailed case studies and answers to common asset protection questions, visit here.

Asset & Creditor Protection Strategies for Your Family

New York offers several legal strategies to shield your assets from creditors, lawsuits, and financial disruptions:

  • Irrevocable Trusts

    Once assets are transferred to an irrevocable trust, they are no longer considered your personal property, making them generally safe from creditors, provided the transfer isn’t fraudulent.

  • LLCs and Business Entities

    Holding business or investment assets in an LLC can protect your personal assets, but in New York, that protection can be lost if you don’t follow the rules. It’s important to keep proper records and separate your personal and business finances.

  • Homestead Exemption

    New York offers limited homestead protection, up to $150,000 in NYC and surrounding counties. In addition, the state recently expanded its personal property exemptions, which include:

    • 90% of income from personal services earned in the past 60 days

    • Up to $3,000 in bank accounts if from exempt sources (Social Security, pensions, etc.)

    • Enhanced protection for child/spousal support

    • Scheduled increases in exemption amounts every three years to match inflation

  • Retirement Accounts

    401(k) plans are protected by federal law, which means creditors typically cannot seize or claim these funds. In New York, certain state laws also give extra protection to other retirement accounts, like IRAs. This means that, in most cases, your retirement savings are safe from lawsuits or debt collectors, especially if your accounts are properly set up and kept separate from other assets.

Nursing Home Planning & Medicaid Protection

One of the biggest threats to your estate is the rising cost of long-term care. In New York, nursing home expenses can be significant, making early and proactive planning essential.

Structure your finances to protect your assets while still meeting Medicaid’s strict eligibility requirements. This often includes transferring assets into an irrevocable trust or making strategic gifts to family members. However, timing is crucial, these transfers must be made well in advance of applying for Medicaid to avoid penalties. With proper planning, you can preserve your savings and property while securing access to long-term care coverage.

  • Irrevocable Medicaid Trusts (MAPTs)

These trusts allow you to protect your home, savings, and other assets from being spent down on nursing home care, while still allowing you to qualify for Medicaid benefits. By moving assets out of your name and into a properly structured trust, you can preserve your wealth for your family and avoid losing everything to long-term care costs. Working with an experienced attorney is essential to ensure the trust meets all legal requirements and aligns with your overall estate plan.

  • Spend-Down & Gifting Strategies

Legal strategies like paying down debt, prepaying funeral expenses, or gifting within Medicaid guidelines can reduce countable assets.

Minimizing Estate Taxes in New York

Preserving your assets isn’t just about protecting against creditors or long-term care costs, it also means reducing the amount lost to taxes after death. In New York, where the state imposes its own estate tax, proper planning is essential to ensure your estate is passed on efficiently and with minimal tax burden.

Here are key tools and strategies commonly used to protect and preserve wealth:

Revocable Living Trusts
While not a tax saving tool, revocable trusts are a powerful way to avoid probate, which in New York can be time consuming, public, and expensive. These trusts allow your assets to pass directly to your beneficiaries without court involvement, preserving privacy and minimizing administrative fees.

Estate Tax Exemptions & Gifting
Strategic gifting during your lifetime can significantly reduce your taxable estate. This includes making use of both federal lifetime gift exemptions and annual exclusion gifts. In addition, certain types of trusts can be used to transfer wealth in a way that takes advantage of these exemptions, further minimizing your estate’s exposure to taxes.

Advanced Wealth Transfer Tools
For larger estates, advanced planning strategies can make a big difference:

  • Grantor Retained Annuity Trusts (GRATs) allow you to pass appreciation on assets to heirs with minimal gift tax impact.
  • Qualified Personal Residence Trusts (QPRTs) let you transfer your home to family members at a reduced taxable value while still living in it for a set period.
  • Family Limited Partnerships (FLPs) are often used to consolidate and manage family assets, while applying valuation discounts that reduce the taxable value of the estate.

Each of these tools must be carefully tailored to your goals and financial situation. In New York, where even modest estates can face significant taxation, working with an experienced estate planning attorney is critical to ensuring your legacy is protected and passed on according to your wishes.

Legally Protecting Assets from Creditors in New York

There’s a big difference between hiding assets and protecting them legally. New York law does not allow you to conceal assets to avoid paying creditors, but it does permit proactive planning to safeguard your property before any financial trouble arises.

Legal asset protection strategies focus on transparency, timing, and structure, and may include:

  • Transferring assets to irrevocable trusts: Once assets are placed in a properly structured irrevocable trust, they are no longer considered part of your personal estate and are generally shielded from future creditors, provided the transfer was not made in response to an existing debt.
  • Using state law exemptions: New York protects certain types of assets, including retirement accounts, a portion of your home equity, spousal or child support, and income from Social Security, pensions, or unemployment benefits. Understanding and leveraging these exemptions is key to building a strong protection plan.
  • Holding assets through legal entities: Using limited liability companies (LLCs) or family limited partnerships (FLPs) to hold business or investment assets can create a layer of separation between personal and business liability. However, these entities must be properly maintained and not used solely to shield assets at the last minute.
  • Planning ahead: Timing matters. Transfers made after debts arise or during litigation can be considered fraudulent and reversed by the courts. Effective asset protection must be done before problems appear.

Simply put, the law allows you to protect your wealth, but only if you do it the right way and at the right time. Working with a qualified attorney ensures your plan is both effective and legally sound.

Comparing Asset Protection Across States

Asset protection laws can vary significantly from one state to another. Whether you own property in multiple states, have family across state lines, or are considering relocating, understanding these differences can help you make informed decisions and build a stronger, more flexible plan.

Asset Protection for New York

New York allows for strong asset protection, but only with careful, proactive planning.

  • Use irrevocable trusts to shield high risk assets and plan for long term care.
  • Set up revocable living trusts to avoid probate and maintain privacy.
  • Hold business assets in LLCs or partnerships, and follow all legal formalities.
  • Plan gifts early to avoid fraudulent transfer issues.
  • Focus on Medicaid planning through irrevocable trusts.
  • Use estate tax strategies like credit shelter trusts and gifting to reduce exposure.

Asset Protection for New Jersey

New Jersey offers similar planning tools but has key differences.

  • No state estate tax, but an inheritance tax applies to some beneficiaries.
  • Use irrevocable trusts for both asset protection and Medicaid planning.
  • Be cautious with joint ownership and life estates, NJ scrutinizes transfers.
  • LLCs offer protection, but only with proper structure and documentation.
  • Gifting can help reduce inheritance tax liability.

Asset Protection for Florida

Florida is one of the most asset protective states in the U.S.

  • Allows Domestic Asset Protection Trusts (DAPTs) for shielding personal assets.
  • Offers a strong homestead exemption that fully protects your primary residence.
  • LLCs and business entities have robust legal protections.
  • No state estate or inheritance tax, simplifying estate planning.
  • Medicaid planning with irrevocable trusts is widely used.
  • Revocable trusts are popular for avoiding probate and reducing court costs.

General Tips for Asset Protection

Effective asset protection in New York isn’t just about having the right tools, it’s about using them early, correctly, and strategically. Here are key practices every New Yorker should consider when building a solid plan:

  • Start Planning Early
    Timing is everything in New York asset protection. Transfers made after a lawsuit is filed or after a creditor claim arises can be considered fraudulent and may be undone by the court. The earlier you act, the stronger your legal position.
  • Combine Legal Tools for Maximum Protection
    No single strategy is foolproof. A comprehensive plan should layer tools such as irrevocable trusts, LLCs, and strategic gifting to build multiple lines of defense. 
  • Maintain Impeccable Records
    New York courts may disregard your liability protections if you don’t follow the proper legal formalities. To keep your personal assets protected, it’s essential to separate business and personal finances, maintain accurate and up to date records, and properly document all major transactions, especially when dealing with family members or closely held businesses.
  • Regularly Review and Update Your Plan
    New York estate and tax laws change frequently. Life events such as marriage, divorce, the birth of a child, or the sale of a business may also impact your planning needs. A review every 2–3 years with a qualified attorney ensures your plan stays effective and legally compliant.
  • Coordinate Asset Protection with Estate & Tax Planning
    In New York, estate tax exposure can begin well below federal thresholds. It’s important to align your asset protection strategies with tax reduction tools to reduce both probate costs and estate tax liability.
  • Title Assets Properly
    Improper titling can undermine even the most sophisticated plan. In New York, make sure your beneficiary designations are current, joint ownership arrangements are intentional, and real estate or business assets are titled in the correct name. This avoids unnecessary probate and reduces creditor exposure.

Frequently Asked Questions

What assets can a debt collector take?

Debt collectors can pursue non‑exempt assets such as bank account balances, wages, and personal property like vehicles or valuable items. However, certain assets, Social Security benefits, most retirement accounts, tools of your trade, and basic household goods are protected by law and cannot be seized. The specific exemptions depend on federal guidelines and New York state law.

How do I protect my personal assets from creditors?

You can protect your assets by using legal tools like irrevocable trusts, establishing separate business entities (LLCs or corporations), and ensuring you have adequate insurance coverage. Additionally, making full use of federal and state exemptions such as those for retirement accounts or a homestead exemption, will help shield your savings and personal belongings. Regularly reviewing your estate plan and financial structure is also essential to avoid unexpected vulnerability.

Is it illegal to hide assets from creditors?

Yes, deliberately concealing assets to prevent creditors from accessing them is considered fraudulent and can result in serious consequences, including court orders to repay, fines, or even criminal charges. Courts scrutinize transfers made soon before or after filing for bankruptcy or when a debt is known to be imminent. Transparency and proper legal structure are vital to avoid accusations of fraud.

Does New York allow asset protection trusts?

New York permits certain irrevocable trusts that can provide asset protection, particularly if they are established and funded well before any creditor issues arise. However, self settled domestic asset protection trusts (DAPT) aren’t fully recognized in New York, which means assets moved into these trusts may still be reachable by creditors. Many New Yorkers utilize out‑of‑state trusts or other legal forms to maximize protection.

Can forming an LLC protect my personal assets from creditors?

Yes, forming an LLC can shield your personal assets from business liabilities, but only if the entity is properly maintained. If courts find that you used the LLC to commit fraud, they may hold you personally liable. Asset protection through entities requires strict separation of business and personal finances, proper documentation, and compliance with legal obligations.

When should I set up an asset protection plan?

Ideally, you should establish an asset protection plan well before any financial difficulties or creditor claims arise, generally when you start accumulating wealth or planning significant transactions. Setting up protections in advance ensures they are legally valid and less likely to be reversed by courts as fraudulent conveyances. The closer the timing of asset transfers is to potential legal action, the more likely a court will invalidate them.

Speak to an Attorney About Your Family’s Needs Today

The Law Office of Inna Fershteyn provides trusted asset protection services to individuals and families across all five boroughs of New York City: Manhattan, Brooklyn, Queens, The Bronx, and Staten Island. We proudly extend our services to clients in key business districts like Wall Street, Midtown, and Downtown Manhattan, as well as throughout Long Island, including Nassau and Suffolk Counties. Whether you're looking for wealth preservation strategies, long-term care asset protection or planning for the future, our team is here to guide you every step of the way. Call us today at (718) 333-2395 to schedule a consultation.

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