Texas
Free Downloads! spacer
Online Presentations

Contact Us Today:

security code

Enter Security Code:


Follow Us Online



Facebook
Twitter
LinkedIn
Blog
YouTube
Learn About Estate Planning
Asset Protection For Professionals
Schedule A Consultation

Font Size:

Austin, Texas Asset Protection • Homestead and Personal Property Exemptions


Section 41.001 of the Texas Property Code (TPC) exempts your homestead from seizure from the claims of creditors with certain exceptions related to taxes, purchase money mortgage, home improvement work and the like.

A "homestead" in Texas is 10 acres if urban (single or married) or 100 acres if rural (200 acres for a married couple) regardless of value. Some states impose a maximum dollar value but Texas does not. The 10 acres for urban homesteads was increased from 1 (one) acre effective January 1, 2000. Temporary renting of a homestead does not change its homestead protection. If you sell your homestead, the proceeds of sale are not subject to seizure for 6 months after the date of sale. Therefore, if you purchase another homestead and roll the proceeds into the new home, then the proceeds are protected. However, if you do not roll the sale proceeds into a new homestead within 6 months, then the proceeds may be lost to a judgment creditor.

In addition to the real property exemption, Section 42.001 TPC exempts certain qualified personal property to not exceed $30,000 for a single adult ($60,000 for a married couple). Qualified property reflects our agricultural history and includes home furnishings, food, wearing apparel, vehicles, jewelry (not to exceed 25% of the limit), 2 firearms, farming / ranching implements, tools, equipment, books used in trade or business, sporting equipment including bicycles, household pets, and 2 horses, 12 head of cattle, 60 head of other livestock and 120 fowl.

Common mistakes with physicians and the Texas Homestead Law are the following:

Can you afford to sell your home?

Example:
Physician owns a 10,000 sq.ft. creditor-proof home worth $2 million; Physician's children are now grown and Physician decides it is time to sell the home and downsize. The problem is that there is a $10 million malpractice judgment against physician. If Physician sells the home and does not rollover 100% of the sales proceeds into a new home, then the excess sales proceeds are subject to creditors.

Moral:
It is difficult to get your equity out of a home if you need it in the future. Don't put all of your eggs in one basket.

Be careful on financial statements.

When you are sued, one of the favorite deposition questions asks you to list all individuals or institutions to whom you have provided a financial statement in the past 6 years. All of us routinely provide financial statements to the bank, the mortgage company, financial planner, etc.. Clients will unknowingly list their vehicles, household furnishings and jewelry at inflated values far in excess of the $30,000 / $60,000 personal property exemption even though the lender is not going to lendmoney based upon these assets. This piece of evidence can give cause allowing the plaintiff's attorney to spend days going through the house room-by-room, utensil-by-utensil until you will gladly pay them to go away.

Moral:

  1. Never list personal property on your financial statement.
  2. If you have important antiques, carpets, paintings, artwork, etc., then create a separate entity to own these valuable collectibles and lease use of them.
Sign Up For Our E-Newsletter
Click here to Read Our Blog

Austin, Texas Estate Planning Attorney, Ken Vanway, provides qualified and comprehensive legal planning in the areas of Estate Planning, Estate Tax Planning, Elder Law, Health Care Documents, Advanced Directives, Wills and Trusts, Revocable Living Trusts, Irrevocable Trusts, Durable Powers of Attorney, Probate & Estate Administration, Special Needs Trusts, Business Law, Business Succession Planning, Family & Small Business, Financial Planning, Buy-Sell Agreements, Limiting Liability, Asset Protection, Exempting Assets, Asset Transfer, Aid & Attendance, and Charitable Planning. The Vanway Law Firm serves clients in the Austin, TX area including, but not limited to, the cities of Lakeway, Spicewood, Bee Cave, West Lake, Barton Creek, and Briarcliff, and the surrounding Austin, Texas metro area.

Copyright © The Vanway Law Firm. All rights reserved. You may reproduce materials available at this site for your own personal use and for non-commercial distribution. All copies must include this copyright statement. Some artwork provided under license agreement.

spacer
Welcome | Practice Areas | Newsletters | FAQs | About Us | Becoming a Client | Contact Us | Workshops | Blog | Disclaimer | Privacy Policy
 
The Vanway Law Firm | P.O. Box 1645 Dripping Springs, Texas 78620-1645
phone: (512) 263-2886 e-mail: ken@vanway.org