The new Bankruptcy Law has taken away some of the hiding places of big money. In the past, Kansas, Florida, Iowa, South Dakota and Texas had an unlimited homestead exemption. Since the new Bankruptcy Law became effective on October 17, 2005 this unlimited homestead exemption may be limited to $125,000 value. If the individual has been charged with financial fraud, securities violations, any criminal act or have a judgment against them arising out of serious physical injury or death, this limit may kick into place. In all events, the creditors will have a 40 month waiting period during which the creditors can attack the home equity. Wealthy individuals have often used Asset Protection Trusts, also known as Self-Settled Trusts. These can be done in Alaska, Delaware, Rhode Island, Nevada, Utah, Oklahoma, Missouri and Colorado. Besides these eight states, off shore tax havens have been around for years. If assets are transferred to a Self-Settled Trust with intent to hinder, delay or defraud current or future creditors, the asset transfer will be deemed fraudulent if the person moving the asset declares bankruptcy within ten years of the creation of the trust. You can see that it would pay a young doctor coming out of medical school to create a Self-Directed Trust so that the ten years could start to run. An IRA created by a transfer of assets from a qualified pension or profit sharing plan will not be subject to the bankruptcy laws up to the sum of $1,000,000.00. To be eligible for this $1,000,000.00 exemption, the Participant must be able to prove they were operating the pension plan and IRA according to IRS rules, the discrimination tests were followed, that all required filings were made and contributions have been properly made. If the plan fails to live up to these points, then the $1,000,000.00 is not exempt.