Best asset protection states you need to know. Your assets are accumulated through hard work as an investor. No matter what you own, your wealth represents your success and future security. A single lawsuit or financial crisis can, however, put everything at risk. Planning for asset protection can shield your assets from creditors and legal judgments. Choosing the right state to domicile your assets is an important part of asset protection planning. We’ll look at the best asset protection states in the US in this article.

Understanding Asset Protection

It’s important to understand the concept of asset protection before we dive into the states. An asset protection plan involves a set of legal strategies and tools to protect your assets from various threats, such as lawsuits, bankruptcy, divorce, or identity theft. Asset protection means making your assets less vulnerable and less attractive to potential creditors while still keeping them accessible and under your control.

Some common asset protection strategies include:

  • Forming a limited liability company (LLC) or corporation to hold your business assets
  • Creating a domestic or offshore asset protection trust
  • Using homestead exemptions to protect your primary residence
  • Converting non-exempt assets into exempt assets, such as retirement accounts or life insurance policies
  • Diversifying your assets to reduce concentration risk
  • Purchasing liability insurance policies

Factors to Consider When Choosing an Asset Protection State

There are several factors to consider when choosing an asset protection state. Here are some of the most important ones:

  • There are different laws regarding asset protection in each state. States offer varying levels of asset protection, with some offering stronger and broader protection than others. Choosing a state whose laws align with your goals and assets is important.
  • Creditors can sue you for debts or judgments within the statute of limitations. You need to protect your assets within a certain time frame based on the statute of limitations in your state.
  • If you plan to form an LLC or corporation, you should choose a state with favorable corporate laws that protect your assets and shield you against personal liability.
  • Tax laws: While asset protection should not solely be based on tax considerations, you want to choose a state that has a low or no income tax, estate tax, or inheritance tax.
  • Residency requirements: Some states require you to be a resident to benefit from their asset protection laws or trust laws. You want to choose a state where you can establish residency easily and meet the requirements.

Top Asset Protection States

Consider these asset protection states in the US:

1. Delaware

Businesses and investors alike benefit from Delaware’s favorable corporate laws. Charge order protection limits creditors’ ability to seize ownership interests of LLCs and corporations. A low franchise tax and a favorable statute of limitations are also among Delaware’s advantages. Registered agents are required, but the initial filing fee is high.

2. Nevada

Nevada offers strong asset protection laws and a favorable tax climate, making it another popular state for asset protection. LLCs, corporations, and partnerships are protected from creditors with charging orders. The state of Nevada also has no income tax, franchise tax, or inheritance tax. A business license and list filing are required, however.

3. Wyoming

Despite its relative youth, Wyoming has quickly established itself as a business-friendly environment with favorable asset protection laws. In Wyoming, LLCs are protected by strong charging orders, which means creditors cannot seize member interests or force the LLC to sell assets. The company also charges a low annual fee and does not charge state income taxes or franchise taxes. There is no state income tax on trust income in Wyoming, and fraudulent transfers are prohibited for two years. Wyoming does, however, require a registered agent and physical presence.

4. Alaska

Its strong trust laws and favorable tax climate make Alaska a unique state for asset protection. A self-settled asset protection trust in Alaska allows you to protect your assets from potential creditors while establishing a trust and becoming its beneficiary. Additionally, Alaska has no state income tax, sales tax, or inheritance tax. A trustee in Alaska must, however, be a resident or have a physical presence in the state.

5. South Dakota

South Dakota is another state that has gained popularity for its trust laws and favorable tax environment. South Dakota offers strong asset protection for trusts, with a two-year statute of limitations on fraudulent transfers and no state income tax on trust income. It also has no state income tax and no inheritance tax. The state of South Dakota does, however, require a trustee to reside there.

6. Florida

Due to its homestead exemption and favorable trust laws, Florida is a popular state for asset protection. Florida’s homestead exemption protects your primary residence from potential creditors as long as it is under a certain acreage and used as a primary residence. Asset protection trusts can also benefit from Florida’s favorable laws, including spendthrift provisions and a 20-year statute of limitations on fraudulent transfers. Taxes on income and estates are not levied by the state of Florida.

7. Texas

Texas has a business-friendly environment and favorable tax laws. A creditor cannot seize your membership interest or force the LLC to sell assets under Texas charging orders. There is also no state income tax or estate or inheritance tax in the state. Primary residences in Texas are also protected from potential creditors by the homestead exemption.

8. New Hampshire

A favorable trust law and a lack of state income tax have made New Hampshire a popular state for asset protection. As a beneficiary of a self-settled asset protection trust in New Hampshire, you are still protected from potential creditors while being a beneficiary. The statute of limitations on fraudulent transfers is also two years.

9. Ohio

LLC laws in Ohio are favorable, including strong charging order protection, which protects your ownership interest from creditors. For primary residences in Ohio, there is a homestead exemption that protects them from potential creditors. Inheritance taxes are also not charged by the state.

10. Utah

Utah is a state with strong asset protection laws and a business-friendly environment. Utah offers charging order protection for LLCs and favorable trust laws, including the ability to create self-settled spendthrift trusts. A three-year statute of limitations covers fraudulent transfers in Utah, as well as no state income tax on trust income.

A state’s asset protection laws are crucial to wealth management. As a result of their favorable laws, tax climates, and business-friendly environments, these 10 states provide an ideal environment for asset protection planning. Asset protection planning should, however, be discussed with a qualified attorney or financial advisor.

Worst States for Trusts

State trust laws differ when it comes to setting up trusts. Trust laws and regulations vary from state to state, with some states more hospitable to trusts than others. Generally speaking, the worst states for trusts are those that have strict laws and regulations that make it difficult or even impossible to establish certain types of trusts.

Taxes can be one of the major factors that make a state unfavorable for trusts. Individuals seeking to set up trusts may find them less attractive due to significant taxes imposed by some states. Trusts in other states may have complex rules and regulations, making it difficult for individuals to establish trusts that meet their specific needs.

The legal environment can also make a state less favorable for trusts. Court systems in some states may be less sympathetic to trusts, making it harder to protect trust assets from creditors or other legal challenges. A trust’s assets may also be more vulnerable to lawsuits or other legal claims in states with weaker or less comprehensive asset protection laws. A state’s reputation as one of the worst for trusts can be attributed to all of these factors.

Best Asset Protection States vs Best Asset Protection Trust States 

Best asset protection trust states refer to states with favorable laws for the creation of asset protection trusts, which protect your assets from creditors. Asset protection laws in these states are often strong, including the ability to create self-settled spendthrift trusts that protect your assets while allowing you to be a beneficiary.

Alternatively, “best asset protection states” are those that have favorable laws and environments for protecting assets in general, including through LLCs, homestead exemptions, and other legal tools. The best states for asset protection may vary, depending on your specific needs and circumstances, but asset protection trusts are one important aspect of asset protection planning.

“Best asset protection trust states” focus specifically on creating asset protection trusts, while “best asset protection states” encompass a broader range of legal tools and strategies.

Other Considerations

These are some of the best states for asset protection, but they may not be right for everyone. A qualified asset protection attorney and financial advisor can help you determine the best strategy for your situation. Here are some additional considerations:

  • No matter where you domicile your assets, you have to comply with the laws of your state of residence, regardless of where your assets are domiciled. Your asset protection plan may be conflicted with state laws or limited by them.
  • Your assets: Different types of assets may require different strategies for asset protection. For example, real estate may benefit from a domestic asset protection trust, while stocks may benefit from a diversified portfolio and liability insurance.
  • Your risk profile: Your risk tolerance and exposure to potential liabilities may affect your asset protection plan. Having a history of legal disputes or working in a high-risk profession may require stronger and more comprehensive coverage.


In order to protect your wealth and secure your future, you need to select the right asset protection state. Delaware, Nevada, Wyoming, Alaska, and South Dakota are some of the best states for asset protection due to their strong laws, favorable tax environments, and business-friendly climates. A comprehensive asset protection plan requires careful consideration of a wide range of factors, however. Asset protection can be minimized by working with qualified professionals and taking a proactive approach.