State Shields

Federal shields are narrow. The wider exemptions live in state law, and state law differs by an order of magnitude across jurisdictions. A retiree in Florida and a retiree in New Jersey can present identical balance sheets and face wildly different exposure to the same lawsuit.

The homestead exemption. A homestead exemption shields equity in your primary residence from most non-purchase-money judgment creditors. The protection ranges from unlimited to zero:

• Unlimited or near-unlimited dollar protection: Florida, Texas, Iowa, Kansas, South Dakota, Oklahoma, and a few others. Florida and Texas are the marquee states for this; both protect any dollar value of homestead so long as acreage limits are observed (½ acre urban / 160 rural in Florida; 10 urban / 200 rural in Texas).
• Substantial but capped: California uses a county-specific sliding scale tied to median home prices, courtesy of AB 1885 (effective January 1, 2021) and codified at C.C.P. §704.730. The exemption equals the prior year’s countywide median sale price for a single-family home, bounded by an annually indexed floor and cap — for 2026, $371,547 and $743,459 respectively. High-cost counties (Santa Clara, San Mateo, San Francisco, Marin) simply receive the cap. The scale adjusts each January 1 with the California CPI, and since 2021 the exemption is automatic — no recorded declaration required, unlike the old regime. Nevada protects roughly $605,000. Massachusetts gives $125,000 automatically and $500,000 only with a recorded declaration of homestead — file it; it is a one-page form and the difference is $375,000.
• Low or zero: New Jersey $0. Pennsylvania $0 — there is no homestead exemption at all, and the $300 figure sometimes quoted is the general personal-property exemption under 42 Pa. C.S. §8123, which is not a homestead provision and does not protect your house. New York runs a three-tier county schedule under C.P.L.R. §5206, adjusted every three years on April 1; the downstate figure is the highest and upstate counties get materially less. Check the current tier before relying on a number.

The federal trap to know about: 11 U.S.C. §522(p), enacted by BAPCPA, imposes a $214,000 cap (effective April 1, 2025 through March 31, 2028, adjusted every three years) on the homestead exemption for any debtor who acquired the homestead within 1,215 days (3.3 years) before filing bankruptcy, regardless of the state’s underlying exemption. The intent was to stop debtors from moving to Florida or Texas with a creditor on their heels and buying a $10M mansion. The rule means a planned domicile change for asset-protection purposes must precede the liability by at least 3.3 years; otherwise the federal cap applies. Plan early; the runway is not short.

Tenancy by the entirety (TBE). About 25 states recognize TBE, a form of marital joint ownership available only to spouses. The defining feature: a creditor of one spouse cannot reach property held in TBE; only a joint creditor of both spouses can. Available in some form in Florida, Maryland, Pennsylvania, Virginia, Delaware, Hawaii, Massachusetts, Missouri, New Jersey, and others; some states restrict TBE to real property, some extend it to personal property and brokerage accounts. Not available in California, Texas, New York, or Illinois.

The federal exception worth knowing: United States v. Craft (2002) holds that a federal tax lien against one spouse can attach to that spouse’s interest in TBE property, overriding state-law TBE protection. The IRS is the one creditor TBE does not stop. Every other ordinary creditor of one spouse is.

State IRA top-ups. Several states extend IRA protection beyond the federal BAPCPA cap to outside-bankruptcy creditors and remove the cap entirely: Texas, Florida, Arizona, and others provide unlimited IRA protection under state law. California, by contrast, limits IRA protection outside bankruptcy to amounts “reasonably necessary” for support of the debtor and dependents — a judicially determined number that is rarely the full balance.

Life insurance and annuities. Florida and Texas grant unlimited exemption for cash value of life insurance and for annuity proceeds under state law (with policy-owner residency requirements). For residents of those states, an overfunded permanent policy or a single-premium annuity also functions as an asset-protection vehicle, not merely a death-benefit or deferral product. Other states cap the protection at modest dollar figures or restrict it to amounts intended for support.

Domicile as an asset-protection lever. If you have read the decumulation chapter, you already understand that domicile is the largest single state-tax lever available in retirement. Asset protection layers a second reason on top. The same move that saves a retiree six figures on a Roth conversion ladder also shifts the entire balance-sheet exposure from a low-shield to a high-shield jurisdiction — and the move locks in only after the BAPCPA 1,215-day clock has run. Tie the two analyses together; the move calendar is one calendar.