Milpitas, CA estates & probate attorney Elijah Keyes discusses how to protect your assets from potential creditors and legal claims. He discusses that, unfortunately, in California, individuals cannot shield their own assets from future creditors or legal claims. While this type of protection is possible in other states, California law does not allow it. What California does permit, however, is the protection of assets for children or younger generations.

For this reason, many parents the firm represents establish what is commonly called a dynasty trust. In formal legal terms, it is known as a generation-skipping transfer tax trust. Although the terminology may sound technical, the concept is straightforward: the trust is designed to protect a child’s inheritance from losses that could occur through divorce or creditor claims. Instead of leaving assets directly to their children, parents often create a dynasty trust so that the child becomes the sole beneficiary and recipient of the trust. Because the assets are held within the trust, creditors cannot easily access them, ensuring greater long-term security for the child.

Returning to the question of whether an individual in California can protect their own assets from creditors, he clarifies that it is not possible under state law. States such as Alaska, Nevada, South Dakota, Delaware, and Texas have specific legal structures that allow for self-settled asset protection trusts. However, these arrangements can be costly and complex to maintain, making them financially impractical unless the individual has substantial assets.