Strategies to Protect the High-Risk Professional’s Assets

Mar 28, 2025 Denver, CO

By: Edward D. Brown, Esq., LL.M, CPA; Eric R. Kaplan, Esq.; Andrew Bechel, Esq., LL.M.; Alexis Whitley, Esq.* (*Legal Intern)

There are various asset preservation strategies that can be implemented by an attorney on behalf of their client to reduce a client’s overall financial profile, and along with it, the size of the potential target against the client that may arise from creditor lawsuits. Discussed below are some of the more often-used strategies.

Exemption planning provides categories of assets that are free from the reach of judgment creditors. Exemptions exist under both state and federal law and may apply in either a bankruptcy or non-bankruptcy setting. If an exemption is available for a specific property, the debtor retains all rights of ownership and enjoyment of the property free from creditor interference. Federal exemptions exist under the Bankruptcy Code, the Employee Retirement Income Security Act of 1974 and the Social Security Act. Many states provide for exemptions of some value in one or more of the following areas: (1) homestead; (2) life insurance/annuity contracts; (3) wages and earnings (or, at least a portion thereof); (4) personal, household and other possessions; and (5) retirement benefits.

The homestead exemption represents one of the most significant protections, which can be beneficial to high-risk professionals. However, states generally impose some limitations on the homestead exemption. For example, while Florida and Texas have unlimited dollar exemptions, both states limit the homestead exemption to a maximum specified amount of land. Colorado, on the other hand, has adopted a monetary limitation, which is $250,000 (or $350,000 if the homestead is occupied by an owner who is either: (1) disabled; or (2) 60 years of age or older).

Insurance is another important aspect of asset preservation, although it may not be able to protect against all liability risk, and policies usually have exclusions that may limit effectiveness. Many high-risk professionals utilize malpractice insurance, though they may also hold general business insurance policies and personal liability insurance policies (such as car insurance, home insurance and umbrella policies). These policies typically have numerous exclusions, such as intentional or grossly negligent conduct, which may limit their effectiveness. Further, individuals may not be able to purchase sufficient coverage to protect against all risks. While insurance is an important aspect of asset preservation, other strategies must also be employed to ensure maximum client protection.

Click here to view the full article originally published in the Denver Business Journal.

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