You’ve spent years building — a business, a home, savings. Asset protection is the legal planning that keeps a lawsuit, a business failure, or a creditor from taking all of it. It is not hiding money or moving assets after trouble starts. Done right, it is done early, in the open, and within the law.
The Strongest Tool: A Well-Designed Trust
A trust is the centerpiece of most asset protection plans. Here’s how it works: you transfer assets into a trust, and the trust — not you — owns them. A trustee manages them for the people you name, under rules you set. Because you no longer own those assets, your creditors generally cannot reach them.
But not every trust protects. A revocable (living) trust helps your family avoid probate, but it does NOT protect against creditors — you still control the assets, so a court treats them as yours. Only an irrevocable trust protects, because you give up ownership and control.
A few of the trust tools we use most:
- Irrevocable life insurance trust (ILIT) — keeps life insurance proceeds out of your taxable estate and away from creditors.
- Spousal lifetime access trust (SLAT) — one spouse moves assets into a trust for the other; the assets are protected while your spouse still benefits.
- Medicaid asset protection trust (MAPT) — protects assets while you plan for long-term care costs (Medicaid looks back 5 years, so this takes advance planning).
- Charitable trusts — support a cause you care about, receive income, and remove the assets from your estate.
- Dynasty trust — protects wealth across generations: from creditors, divorces, and estate tax at each generation.
Ohio allows self-settled asset protection trusts (“legacy trusts”) under the Ohio Legacy Trust Act, R.C. Chapter 5816. Which structure fits — a legacy trust, another irrevocable trust, or a trust under another state’s law — depends on your assets and goals.
And the timing rule: a trust must be set up before a claim exists. If you transfer property after someone sues you — or after you know a claim is coming — an Ohio court can undo the transfer as a fraudulent transfer under Ohio’s Uniform Fraudulent Transfer Act. Asset protection rewards the early and the honest.
The Other Layers
A trust works best as part of a layered plan:
- Insurance first. A good liability policy — and an umbrella policy on top — pays defense costs and judgments in most everyday claims. No trust replaces it.
- Separate business from personal. Keep your business in its own LLC, with clean books and separate accounts, so a business debt generally reaches only the business’s assets.
- Title and retirement accounts. Ohio no longer allows new tenancies by the entirety (only those created before April 4, 1985 remain), so how you title your home should be reviewed with counsel. Retirement accounts also carry strong protection under federal and Ohio law, but the protection has limits: employer plans such as 401(k)s are broadly protected; IRAs are protected only within federal contribution limits, and in bankruptcy the protection for IRAs and Roth IRAs is capped at $1,711,975; and payments from some private plans are protected only to the extent reasonably necessary for your support. Don’t cash retirement money out to pay a claim without advice.
What Ohio Law Already Exempts From Creditors
Even without any planning, Ohio law shields a baseline of property from most creditors. These are the current figures under ORC 2329.66 (schedule in effect April 1, 2025 – March 31, 2028; the schedule adjusts for inflation every three years):
- Home (homestead/residence): $182,625 of equity
- Household items: $16,850 total (up to $800 per item)
- Jewelry: $2,125
- Wildcard (any property): $1,675
- Wages: a creditor can take at most 25% of your take-home pay — and if your weekly take-home is $217.50 or less, it can take nothing
Don’t confuse these with Ohio’s separate property-tax homestead exemption (a different program, for qualifying seniors and disabled homeowners, that reduces property taxes). The figures above are what a creditor generally cannot take in collection or bankruptcy.
The Bottom Line
Insurance, an LLC, and the exemptions Ohio gives you are the supporting layers. The strongest protection is a well-designed trust, built before you need it. The best time to put it in place is now, while everything is calm.
If you’d like a plan fitted to your assets, contact us at (440) 835-2271 or info@leijianglaw.com.
This article is general information only and is not legal advice.