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What Assets Are Protected in a Lawsuit in Texas? Know Your Legal Shield

No one expects to be sued—but in today’s world, lawsuits can arise from car accidents, business disputes, medical bills, or personal injury claims. If someone comes after your assets, what can they take?
More importantly, what assets are protected in a lawsuit in Texas?

The good news: Texas has some of the strongest asset protection laws in the country. From your home to your retirement accounts, many assets are legally shielded from creditors and legal judgments.

In this blog, we’ll walk you through which assets are protected—and which aren’t—so you can plan accordingly and protect what you’ve worked hard to build.

What Is Asset Protection?

Asset protection refers to legal strategies and protections that shield your property from creditors, lawsuits, or court judgments.

In Texas, asset protection laws are designed to:

• Prevent individuals from losing everything in a single lawsuit
  
  
• Encourage economic growth by protecting key assets
  
  
• Provide financial stability for families and business owners
  
  

That said, protections are not automatic for everything—and smart planning is key.

Exempt vs. Non-Exempt Assets in Texas

In a lawsuit or debt collection case, exempt assets are protected by law and cannot be seized by creditors.
Non-exempt assets are fair game and can be used to satisfy judgments.

Let’s take a closer look at which are which.

Exempt Assets Protected in a Lawsuit in Texas

✅ 1. Homestead (Primary Residence)

Texas has one of the strongest homestead protections in the U.S.
Your primary residence is generally exempt regardless of its value or equity—provided it sits on:

• Up to 10 acres in a city or town
  
  
• Up to 100 acres (single person) or 200 acres (family) in rural areas
  
  

📌 The protection doesn’t apply to second homes, investment properties, or vacation homes.

✅ 2. Retirement Accounts

Most qualified retirement plans are protected from lawsuits under both Texas and federal law, including:

• 401(k) accounts
  
  
• IRAs and Roth IRAs
  
  
• Pension plans
  
  
• Government retirement accounts (TRS, ERS)
  
  
• Deferred compensation plans
  
  

⚠️ Withdrawals from retirement accounts may become non-exempt if commingled with regular funds—so be cautious.

✅ 3. Life Insurance and Annuities

Texas protects:

• The cash value and death benefits of life insurance policies
  
  
• Proceeds of annuities, including fixed and variable annuities
  
  
• Benefits paid to a spouse or child (as long as they’re not part of the lawsuit)
  
  

✅ 4. Personal Property (Up to $100,000 for a Family, $50,000 for a Single Adult)

Texas law allows you to protect a wide range of personal property, including:

• Home furnishings
  
  
• Clothing and jewelry (up to a limited amount)
  
  
• Tools of your trade or profession
  
  
• Two firearms
  
  
• Athletic and sporting equipment
  
  
• One vehicle per licensed household member
  
  
• Pets and domestic animals
  
  

This protection is called the Texas Personal Property Exemption.

✅ 5. Wages

In Texas, wages are generally protected from garnishment, with limited exceptions (like child support, student loans, or taxes).

Once deposited into a bank account, however, wages may lose protection unless clearly identifiable—so it’s wise to keep them separate from other funds.

✅ 6. College Savings (529 Plans)

Texas protects funds in a 529 college savings plan, provided they’ve been in the account for at least two years and are intended for education expenses.

Assets That Are NOT Protected in a Lawsuit in Texas

❌ Cash in Checking or Savings Accounts

Once your money hits a bank account (especially from non-exempt sources), it becomes vulnerable unless it’s clearly traceable to a protected source (e.g., wages, retirement).

❌ Investment Accounts (Non-Retirement)

Stocks, mutual funds, brokerage accounts, and other investments outside of retirement accounts are generally not exempt.

❌ Second Homes and Vacation Properties

Only your primary residence is protected under the homestead exemption. Any other properties may be seized or forced to sell in a lawsuit.

❌ Luxury Items

Jewelry above the exemption limits, collectibles, boats, art, and high-end vehicles may be subject to seizure.

❌ Business Interests

Business ownership (like LLC shares or partnerships) is not automatically protected, unless specific asset protection measures are in place.

What About Jointly Owned Property?

Texas is a community property state, which means spouses share ownership of most property acquired during marriage. However:

• If only one spouse is sued, half the community property may still be at risk.
  
  
• Separate property (owned before marriage or by gift/inheritance) may be protected—but proving this can be tricky.
  
  

📌 Asset protection planning should always consider marital status and ownership structure.

What If You Transfer Assets to Avoid a Lawsuit?

Don’t. Transferring property to avoid a creditor or lawsuit is considered a fraudulent transfer and can be reversed by the court.

Legitimate asset protection must be done before a lawsuit is on the horizon—not in response to one.

How to Protect Non-Exempt Assets

If you have high-risk assets (like cash, investments, or business interests), consider these strategies:

• ✅ Forming an LLC or limited partnership
  
  
• ✅ Creating an irrevocable trust (carefully structured)
  
  
• ✅ Purchasing umbrella liability insurance
  
  
• ✅ Using gifting strategies or charitable giving
  
  
• ✅ Reallocating assets into protected categories (e.g., homestead or retirement)
  
  

A Texas asset protection attorney can help you create a plan that complies with state law and shields your property without crossing legal lines.

How The Lange Firm Helps Texans Protect Their Assets

At The Lange Firm, we help individuals and families in Texas:

• Evaluate their exposure to lawsuits or creditors
  
  
• Create custom legacy and asset protection plans
  
  
• Use legal tools like trusts, LLCs, and homestead planning
  
  
• Navigate complex property and inheritance laws
  
  
• Avoid costly legal mistakes
  
  

📞 Contact us today for a confidential consultation and secure your peace of mind.

Final Thoughts

Lawsuits can happen to anyone—but losing your hard-earned property doesn’t have to be part of the story.
With Texas’s strong exemption laws—and the right legal planning—you can shield your home, retirement, wages, and more from creditors.

✅ Knowing what assets are protected in a lawsuit in Texas is the first step. Working with the right attorney is the next.