Other Methods to Preserve Your Estate

Updated: January 13, 2023

Property and assets inherited after your death goes through the probate court if they are included in your will or if you die without one. Avoiding the probate process will save time and money on legal and court fees. There are many ways to do this.

Trusts are one of them, but they can be complicated and expensive to create and manage. In practical terms, using a trust to transfer assets makes the most sense for the very rich or those who live in a state with a low estate tax threshold. Although a trust avoids the probate process, protects assets from creditors, and allows you to control how your estate is used by your beneficiaries, this is usually not reason enough for most people to justify the cost of creating a formal trust.

Although it involves the probate process, a will is still the better choice for the majority of people. It is less complicated, better recognized, and costs less than creating a formal trust for your assets. When you use a will, you can also use the methods in this section to avoid probate when you pass on many of your financial assets without the cost and complexity of a trust.

  • These other methods are much easier and less expensive, some being free to do. Like a trust, these other methods avoid the probate process and protect your assets.
  • They are usually not necessary for assets that are jointly owned, especially since the joint ownership agreements supersede trusts, wills, and transfer on death agreements. Although they could be a safeguard if all of the owners die at the same time.

These documents must have specific legal language and comply with your state’s estate and homestead laws. When naming beneficiaries be sure to identify them by name, not their relationship to you.

Payable/Transfer on Death Accounts

Payable or transfer on death accounts are a means for you and any co-owners to directly name one ormore beneficiaries without using your will by filling out paperwork from the institution containing the asset. If you have multiple beneficiaries, you can determine the amount or percentage each beneficiary receives.

  • One way is to use a beneficiary designation form to transfer individual assets to someone after your death.
  • They are available in all states, but individual laws will vary.
  • Most financial assets or accounts that allow you to name a beneficiary will offer this when they are acquired or created. However, this can be done at any time as long as you are not incapacitated or otherwise unable to freely make these decisions.
  • The forms authorize the institution to transfer the assets or pay out their value directly to your designated beneficiary after your death, or the beneficiary named by the last surviving partner.

Common assets that allow a beneficiary to be named include:

Investments such as stocks and other securities can be passed on this way, but are better handled with a transfer on death registration described below

Other Considerations When Creating a Payable On Death Account.

  1. With a payable on death account you can change or add beneficiaries at any time.
    • The beneficiary designation in the account overrides any conflicting beneficiary designation in your will, trust, or any other legal document designating one. This is not true if the account is jointly owned with the right of survivorship which overrides all other designations
    • Your designated beneficiary has no power to manage or access these accounts while you are alive.
    • Adding beneficiaries will ensure that the assets are quickly dispersed at your death, which will save time and money. However, it won’t be quick enough to pay bills due soon after your death such as funeral/burial expenses or outstanding debts.
    • It is best not to name minor children as beneficiaries.
      • Financial institutions don’t release money to minors and the process of getting the assets to them is complicated and expensive.
      • It will usually require a court order, even if they have a living parent.
      • The court will require proof that a parent or legal guardian will hold the money for them.
    •  Charitable organizations can be beneficiaries.
    •  If you are married, some of these accounts are already partially or jointly owned by your spouse, especially in community property states. Unless they sign off on the beneficiary designation, they may be entitled to half of the account.
  1. You can request payable on death forms that your brokerage company, bank, or other institution can provide. The forms are usually free of charge.
  2. By designating beneficiaries, you can increase the amount of your money that is insured in a given institution under FDIC rules.
    • Generally, the FDIC insures each person’s total accounts in each bank up to $250,000.
    • By adding an additional account with a beneficiary at that bank, you can double this amount.
  1. You can name an alternate beneficiary in case a beneficiary dies before you or you can name a new one if it happens while you are alive. It’s more complicated if a named beneficiary dies after you but before they access the funds.
    • An alternate beneficiary is the best way to avoid complicating matters if you have a single beneficiary. Probate court will become involved if you don’t.
    • If you had multiple beneficiaries, the amount would be split evenly among them despite what provisions you had previously made for this.To avoid this, you can name alternate beneficiaries for each or specify the split that would happen if one or more of them dies.
  1. You are at no risk from your beneficiary’s creditors. However, your beneficiaries will not be protected from your creditors if you don’t leave enough assets to pay claims and debts.
  2. When your beneficiaries claim funds from the assets, they must provide evidence of your death (a certified copy of the death certificate) and proof of their identity.
  3. Pay on death accounts are not really necessary or appropriate if you are going to create a formal trust since a trust also avoids the probate process.

Transfer on Death Registration

A Transfer on Death Registration is similar to Payable on Death Accounts and Transfer on Death Deeds. It is the most effective way for you to transfer investments such as stocks and other securities.

Transfer on death registrations are recognized in most states. The beneficiaries must contact the transferring agent and re-register the investment in their name by sending a copy of the death certificate and an application for re-registration with the account number.

Totten Trust 

A Totten Trust is an informal revocable living trust that is actually a type of payable-on-death account created at your bank for your accounts there. They may be called tentative trusts, informal trusts, or revocable bank account trusts and are recognized in most states. The major goal of the trust is to ensure that your financial assets avoid the probate process.

  • It can be a formal trust established by naming a beneficiary in the title on the account using language such as “In Trust For,” “Payable on Death To” or “As Trustee For.”
  • It can be funded with financial assets but physical property cannot be included.
    • There is no limit to how much can be added.
    • Unlike the other transfer on death methods in this section, the assets are no longer considered part of your estate if you are not the trustee, but are subject to income and capital gains tax and are available to creditors.
  •  This trust is created while you are alive and can be altered or revoked at any time before your death. You will usually name yourself as the trustee.
  •  You will be allowed to manage and use the trust/account as you want.
  • If you are the trustee, you are the owner of the trust and the assets will be considered part of your estate for estate tax purposes after your death.
  • Unlike most other trusts, a Totten does not allow you put limits on how the funds are used after your death.
  • The beneficiary does not need to contact any executor, merely provide a certified copy of your death certificate and proof of their identity.
  • At your death, the funds will be subject to inheritance taxes.

Transfer on Death Deeds

The transfer on death or beneficiary deed is another way to transfer real estate, possessions, and other property you own by yourself without the probate court being involved, unless your beneficiary dies before you and there is no contingent/backup beneficiary. Jointly owned with the right of survivorship is handled differently.

  • It is much less complicated and expensive than a trust or a will and it does not restrict you from managing your property, including  selling, refinancing, renting out, or mortgaging the property.
  • The transfer does not affect your surviving spouse’s ability to qualify for Medicaid or homestead protection.
  • You create the deed using an online or state-specific form, software, or attorney.
  • Transfer on death deeds are recognized in 28 states and the District of Columbia.
    • The states include: Alaska, Arizona, Arkansas, California, Colorado, Hawaii, Illinois, Indiana, Kansas, Maine, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Texas, Utah, Virginia, Washington, West Virginia, Wisconsin, and Wyoming. 
    • Most states will have their own laws and may provide their own forms.
    • Some states require an attorney to create the deed.
  • Motor vehicles can be transferred in Arizona, Arkansas, California, Connecticut, Delaware, Illinois, Indiana, Kansas, Missouri, Nebraska, Nevada, Ohio, Vermont, and Virginia. Request the forms from the department in your state that handles vehicle titles.

Florida, Michigan, Texas, Vermont, and West Virginia recognize an Enhanced Life Estate Deed, sometimes referred to as a “Lady Bird Deed”  and Ohio has replaced the transfer on death deed with a transfer on death affidavit; both perform a similar function.

These methods avoid the probate process by transferring your property directly to an adult beneficiary after your death. This involves naming beneficiaries on the deed/title. Filling out a transfer on death deed is easy, but certain items and language must be included. Forms are available online.

  • Each asset will need its own document with named beneficiaries.
  • Most states require that the deed include the same information as a regular deed. This includes your name as the owner of the property and a valid legal description of the property to be transferred.
  • It must be stated explicitly that the transfer will only occur at your death.
  • You can name one or more beneficiaries for each asset. When selecting more than one beneficiary, check your state’s rules; some do not allow uneven splitting of a property.
  • It’s important to name successor beneficiaries in case your primary beneficiaries die before they can claim the asset, refuse to accept the property, or are not available for other reasons.
  • Some states do not allow entities or organizations to be named as beneficiaries.

The transfer on death deed is valid once it is signed and recorded in the public land records office in the county where the property is located. It is not valid if filed after your death.

  • Once the deed is valid, the beneficiary designation overrides any conflicting beneficiary designation in your will, trust, or any other legal document designating one.
  • Most states require you to have it notarized, but there is some variation. A beneficiary’s signature is usually not needed.
  • The deed is not effective while you are alive. You retain full power over the property, including the right to mortgage or sell it. Assets are protected from your beneficiary’s creditors.

You can change beneficiaries for the transfer on death deed, modify, revoke, and/or replace it at any time during your lifetime.

  • If you want to modify an existing transfer on death deed, it may be better to create a new one. The process is the same as creating the original with the addition of language that explicitly revokes any previously recorded transfers on death related to the same property.
  • To just want to revoke a transfer on death deed you can create a revocation document. The process of creating a revocation document involves requesting a revocation form from the county recording office, filling it out, signing it, and recording the deed was revoked.

After your death, the beneficiary will become the new owner by filing your death certificate with the county where the property is located.

  • Any property transferred to your beneficiary includes the financial obligations that come with it, such as any outstanding mortgage, unpaid taxes, or liens/debts.
  • You are not giving the property away during your lifetime, meaning that gift taxes don’t apply but the property is still part of your estate when estate taxes are assessed.
  • The validity of the deed can be challenged after your death, usually by questioning your capacity to create a valid deed. Most states give families a certain amount of time to challenge the title. Beneficiaries usually cannot sell the property until this time has passed.
  • Consider adding a notarized testimony that you are of sound mind and are not creating the deed under duress or undue influence. 

Homestead Protection

The homestead protection law is designed to protect qualified individual property owners or their families from losing their homestead property to creditors during hard times, such as your death.

  • The laws work through equity protection, property tax reductions, and financial exemptions for certain possessions.
  • The federal government and every state have their own homestead laws and exemptions.
  • Your beneficiaries may qualify for a federal homestead exemption if they now have a low income and they are at least 65 years old, they have a permanent and total disability, or you or they are a veteran.

Homestead protection laws vary significantly from state to state. Some states have differences between counties, like Florida, while others can vary by territory. There is significant variation among states in how the exemption is applied and how much is protected from creditors.

  • In most states with an age limit those 65 years old and older qualify, while a few states have slightly lower age limits (60-62 years old).
  • Many states have other criteria that will qualify your family, such as having a low income alone, being a first responder, having dependent children (head of household), being a victim of a natural disaster, or just being a surviving spouse.
  • The homestead exemption happens automatically in some states, while in others your surviving family has to register eligible property as a “homestead”  with your state’s local tax authority and either in person or using the website. To do this they may need a driver’s license, vehicle registration, voter registration, Social Security number, recorded deed, and tax returns.
  • Thirty-one states require families to use the state limits.
  • Alaska, Arkansas, Connecticut, District of Columbia, Hawaii, Kentucky, Massachusetts, Michigan, Minnesota, New Hampshire, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Texas, Vermont, Washington, and Wisconsin allow either the federal or applicable state limit to be used, whichever offers more protections. However, the state limits are usually higher.

Equity Protection

The primary purpose of equity protection is to assure that your surviving family has both physical shelter and financial protection. These laws can prevent them from needing to sell the residence by allowing a portion of it to be claimed, making that portion of estate off-limits to unsecured creditors — those who make loans without requiring collateral. Protected properties include farms, houses, condos, co-ops, mobile homes, and burial plots. Any unused portion of the homestead exemption can be used for other property.

The equity protection only includes the primary residence or personal property used as a residence (such as a residential trailer), the land it sits on, and any out-buildings or annexes. This does not apply to other property you own even if they are residences, since the law only entitles the owners to one primary residence. For example:

  • Your second home, vacation condo, or other property are not included; or
  • If you own a condo and live in one unit and rent out the other units, you can only claim the unit you live in. 

If your surviving spouse moves their primary residence, they must remove the homestead exemption from their former primary residence and refile for the exemption in their new area of residence. 

The exemption does not prevent:

  • The need to pay any owed taxes;
  • Your bank from foreclosing if the mortgage has defaulted; and/or 
  • Secured creditors with liens on your house or who accepted your home as collateral from forcing the sale of the home to pay debts owed them.
Protection limits for your primary residence only apply to the equity you have in your home at the time of your death. Equity is the assessed value of the home minus the balance of the mortgage and other financial claims on it.
  • If the equity in the home is less than the exemption limit in your state, your family can’t be forced to sell the home to pay creditors.
  • If the equity exceeds the limits, creditors may force them to sell the home, although your family will keep the amount of the proceeds left after paying the debts and other costs.
Homestead exemption amounts.
  • From April 1, 2019 to March 31, 2022 the federal homestead exemption amount is $25,150
    • 0, $55,800 for spouses who co-own property.
    State-specific Homestead Laws can be found at USLegal website..
  • There may be acreage limits to the size of the property that can be protected. Exclusions for agricultural land are usually higher.

Property Tax Exemption

The homestead property tax exemption only applies to your primary residence. It allows your surviving spouse to exempt a part of the property’s assessed value, essentially reducing the value of the property used to calculate property/homestead tax. These exemptions can help your surviving spouse and family to stay in the home after their income has been reduced by your death.

The homestead property tax exemption is based on the value of the home. It is available in some states and may provide ongoing reductions in property taxes. In some states every homeowner gets the tax exemption while eligibility in other states depends on income level, property value, age, or if you’re disabled or a veteran.

A homestead tax or property tax exemption is usually based on the local government tax assessor’s office determined value of the home.

The exemption can be a percentage of the property’s value, but is usually a fixed tax deferment.

A fixed exemption makes the reduction in property tax progressive, being more significant to those with less expensive homes.

The calculation of the exemption involves subtracting your state’s exemption from the value of the home before calculating the estate. For example, if the home is assessed at $250,000 and your property tax rate is 1%, the property tax bill would be $2,500. But if you were eligible for a homestead tax exemption of $50,000, the taxable value of your home would drop to $200,000, meaning your tax bill would drop by 20% to $2,000.

If we compare houses using the above calculation where the first $50,000 of the assessed value is exempt from property taxes, when the value of the house increases:

  • A home valued at $50,000 or less would have no property tax;
  • A home valued at $75,000 would be taxed on $25,000 or 33% of the assessed value;
  • A home valued at $100,000 would be taxed on $50,000 or 50% of the assessed value;
  • A home valued at $200,000 would be taxed on $150,000 or 75% of the assessed value;
  • A home valued at $250,000 would be taxed on $200,000 or 80% of the assessed value; and
  • A home valued at $400,000 would be taxed on $350,000 or 88% of the assessed value.

Property tax exemptions are also available to many people based on their age, veteran status, disabilities, income, and head of household status.

  • Alabama — Qualifying homeowners under 65 years old up to $4,000. Seniors 65 years old and older, and those with visual or permanent and total disabilities, have no exemption limit.
  • Alaska — Qualifying homeowners, including seniors 65 years of age older or at least 60 years old and is the surviving spouse of a person who is a senior, disabled veterans, surviving spouses or those with history of military service and seniors can get from $50,000-$150,000 based on the assessed value of their home.
  • Arizona — Qualifying homeowners include seniors age 65 and older, widows and widowers, those with a total and permanent disability, and veterans with a disability get adjustments based on adjusted gross income and years of ownership.
  • Arkansas — Qualifying homeowners can get property tax credit up to $375 per year. Additional credits are available for seniors 65 years old and older and those with disabilities.
  • California — Qualifying homeowners can get up to a $7,000 reduction on their primary residence. The disabled veterans’ exemption is $100,000 for the primary place of residence of a veteran or their surviving spouse.
  • Colorado — Qualifying seniors and disabled veterans exemption is up to 50% of the first $300,000 of the value of their primary home.
  • Connecticut —Veterans with at least 90 days of wartime service can get a $1,500 property tax exemption. Additional exemptions are based on income and disability.
  • Delaware — Seniors 65 and older can get 50% (up to $400) credit against school property tax for their primary residence if their legal domicile has been Delaware for at least 3 consecutive years; 10 years if established on or after January 1, 2018. 
  • Florida — Qualifying homeowners can get an exemption that reduces the tax value of their property up to $50,000.  Seniors, veterans and active duty military service members, disabled first responders, those with disabilities, and properties with specialized uses can claim higher exemptions
  • Georgia — Homeowners can get $2,000 deducted from 40% of the assessed value of their primary residence. Those aged 65 and over can claim $4,000, while disabled veterans or their surviving spouses could claim up to $85,645. The spouse of a peace officer or firefighter killed in the line of duty will be granted a homestead exemption for the full value of the primary residence for as long as they occupy the residence.
  • Hawaii — The basic exemption for homeowners under the age of 60 years old is $40,000, for homeowners aged 60-9 years is $80,000 and for homeowners 70 years of age or over is $100,000. There is also an additional exemption of 20% of the assessed value of the property not to exceed $80,000  Additional exemptions are available for totally disabled veterans and others who have visual or hearing impairments, or other disabilities.
  • Idaho — Qualifying homeowners can get 50% the value of their primary residence (up to $125,000) deducted from property tax. Disabled veterans can claim further reductions.
  • Illinois — Qualifying homeowners can claim $6,000 to $10,000, depending on the county their primary residence is in. There are additional exemptions for seniors, the disabled, veterans, home improvements, and natural disasters.
  • Indiana — Homeowners can exempt the lesser of 60% of the assessed value of their primary residence or $45,000. Additional exemptions are available for seniors earning less than $30,000 per year with homes less than $200,000 in value, veterans depending on level of disability, disabled persons, rehabilitations, and those with mortgages, who can exempt the lesser of $3,000, 50% of the properties assessed value, or the balance of the mortgage.
  • Iowa — Qualifying homeowners can get a credit that is equal to the actual tax levy on the first $4,850 of the home’s actual value. Additional deductions and exemptions are available for seniors, families, veterans, and those with disabilities.
  • Kansas — Refunds are available for homeowners who have resided in the state at least one tax year, earned less than $37,750 in 2022 and have any of born before January 1, 1967, have been blind or totally and permanently disabled all of 2022, or have a dependent child who lived with you the entire year who was born before January 1, 2022, and was under the age of 18 the entire year. Seniors  65 years of age or older qualify if they had a household income of $22,000 or less.
  • Kentucky — Exemptions are based on age, disability, and veteran status. Qualifying homeowners can deduct $46,350 (for 2023-2024) from the assessed value of the home.
  • Louisiana — Qualifying homeowners can get a tax exemption of up to $75,000 for their primary residence. An additional $15,000 exemption is available for veterans with a service-connected total disability.
  • Maine — Qualifying homeowners residing in Maine for at least 12 months can get a $25,000 exemption for their primary residence. Veterans who served during a recognized war period and are 62 years or older; or, are 100% disabled can get an additional $6,000. Visually impaired individuals can exempt an additional $4,000. There are also exemptions for residents of homes with renewable energy improvements.
  • Maryland — Exemptions are available for military veterans with a permanent and total service connected disability and the surviving spouses of military personnel who were killed while serving.
  • Massachusetts — Exemptions are available for qualifying seniors, veterans and their surviving spouses, the blind, the surviving spouses of firefighters and police, and others facing hardship due to age, infirmity, and poverty.
  • Michigan — Various tax exemptions are available for disabled veterans or their surviving spouses.
  • Minnesota — Exemption programs are available for those with visual impairment or other disabilities., seniors, veterans, disaster relief, and other qualifying situations.
  • Mississippi — Qualifying homeowners can get an exemption for the first $7,500 of the assessed value of their primary home. Additional tax credits are available for seniors, veterans, and those with total disabilities or severe visual impairment.
  • Missouri — Seniors and those with total disabilities can get up to $750 in credit for rent and a maximum of $1,100 for their primary residence.
  • Montana — 2023 exemptions are based on 2021 adjusted gross incomes; less than $24,607 for individuals and $32,000 for couples or heads of household. The reduction varies from 30%-80% depending on income.
  • Nebraska — Qualifying homeowners include those over 65 years old, the disabled, and veterans and their surviving spouses.
  • Nevada — 2022/2023 exemptions are $3,080 for veterans, $15,400-$30,800 for disabled veterans based on level of disability, $1,540 for surviving spouses, and  $4,620 for those with severe visual impairments.
  • New Hampshire — Tax credits ranging from $50 to $4,000 are available for qualifying veterans, surviving spouses, and those with severe visual or hearing impairments, or other disabilities.
  • New Jersey — A new program will offer paid benefits rather than exemptions. Starting in the late  spring of 2023 homeowners with income of $150,000 or less will receive $1,500, homeowners with income of more than $150,000 and up to $250,000 will receive $1,000, and renters with income of $150,000 or less will receive $450.
  • New Mexico — Homeowners can get a $2,000 reduction on the taxable value of their residence as long as they are a New Mexico resident and the head of household, a surviving spouse, or a veteran. Veterans with a total disability can get a 100% exemption.
  • New York — A variety of exemptions are available for seniors, veterans, persons with disabilities, and agricultural properties.
  • North Carolina — Qualifying residents age 65 and over or permanently disabled whose 2022 income is less than $33,800 can get an exemption for either $25,000 or 50% of the appraised value (whichever is greater) of their primary residence.
  • North Dakota — Homeowners 65 and over, or disabled individuals earning less than $42,000 and assets less than $500,000 can qualify for a credit. Additional credits, refunds, and exemptions are available disabled veterans and other applicants.
  • Ohio — Homeowners who are seniors or persons with disabilities who earn less than $34,600 in 2022 can get an exemption up to $25,000.
  • Oklahoma — Homeowners who are residents for at least one year and are at least 62 years old, are the head of a household, and had gross household income or less than $37,200 for the preceding year  can get an exemption of $2,000 off the assessed valuation of their residence.
  • Oregon — Oregon has over 100 exemption programs for veterans, seniors, and people with disabilities.
  • Pennsylvania — Most homeowners can get a property tax reduction for their primary residence.
  • Rhode Island — Exemptions are available for seniors up to $600, people aged 62-64 years up to $460, people with total disability up to $499, veterans with service-related disabilities up to $307, veterans  honorably discharged from a recognized conflict or surviving spouse of a veteran up to $153, and  those with severe visual impairments blind up to $921. The property value will be reduced by 45% and taxed by the residential rate of $17.80 up to the specific limits noted above.
  • South Carolina — Homeowners in residence for at least one year and are over age 65, totally and permanently disabled, or legally blind can qualify for an exemption on the first $50,000 in Fair Market Value of their primary residence.
  • South Dakota — A variety of sales or property tax refunds are available for seniors at least 66 years old, disabled and veterans earning less than $13,635 for a single-member household or less than $18,465 for a multiple-member home.
  • Tennessee — Eligible applicants include low income elderly and disabled people earning less than $31,600 can get up to $30,000 exemption. Disabled veterans and surviving spouses can get an exemption on the first $175,000 of their home’s market value.
  • Texas — Qualifying homeowners can get a $40,000 exemption, but some school districts can limit the exemption to 20% of the property’s appraised value. Additional exemptions are available for seniors and persons with disabilities from $3,000-$10,00, and disabled veterans according to their level of disability.
  • Utah — Homeowners in residence for at least 183 consecutive calendar days during the calendar year can get a 45% exemption on the fair market value of their primary residence and up to one acre of land.
  • Vermont — Any homeowner in residence for at least 183 consecutive calendar days during the calendar year can file an annual homestead declaration for their primary residence and land.
  • Virginia — Qualifying veterans and surviving spouses can get a real estate tax exemption.
  • Washington — Tax exemptions are based on income, the value of the residence, and the local levy rates and available for those 60 years of age or older, people retired from regular gainful employment due to a disabilities, homeowners with a combined disposable income of $57,000 or less, and veterans with 100% disabilities and their surviving spouses.
  • Washington D.C — Homeowners who are seniors or disabled can get a $84,000 exemption from the value of their primary residence.
  • West Virginia — Homeowners age 65 and older and persons with permanent and total disabilities can get an exemption for the first $20,000 of their primary residence.
  • Wisconsin — Homeowners can get a property tax credit for their primary residence.
  • Wyoming — Veterans who experienced active combat or their surviving spouse can get a $3,000 refund for the assessed value of their primary residence. Additional tax deferrals and refunds are available for those with limited income  who are over 62 years old or handicapped and have purchased property 10 years prior to applying for deferral of taxes.

Other Property Exemptions

Items of personal property, benefits, and wages can be protected from creditors. 

Personal property eligible to be exempt include (check your state law for specifics): household furniture and appliances, tools of the trade (such as a building contractor’s pickup truck and power tools), family photos, clothing, musical instruments, burial plots, and/or water rights.

Although these exemptions are available to your surviving spouse and dependent family, these items are covered under the federal and state-specific bankruptcy laws.

Many states allow you to choose between the state or federal exemptions, but you must choose one or the other.

The current federal personal property exemption amounts are:
  • $4,450 for your motor vehicle;
  • $1,875 for jewelry;
  • $700 per individual item with a $14,875 aggregate value on household goods, furnishings, appliances, clothes, books, animals, crops, and musical instruments;
  • $2,800 for tools of the trade, including implements and books
  • health aids;
  • $14,875 in loan value, accrued dividends, and/or interest in a life insurance policy; and 
  • $1,475 plus $13,950 of any unused portion of your homestead exemption as a wildcard exemption
    • This allows you to apply some or all of this exemption to an item that belongs in another category or doesn’t have a category at all.
    • For example, if you have tools worth $4,275 you can only exempt $2,800 of their value using the federal exemption for tools. However, you could exempt the remaining $1,475 of their value using the federal wildcard exemption.
  • A portion of their wages (the percentage of your surviving spouse’s wages that can be protected varies by state);
  • Tax exempt retirement accounts and IRAS and Roth IRAs to $1,362,800;
  • Social Security benefits;
  • Civil Service benefits; 
  • Veterans Benefits;
  • Public assistance;
  • Disability, unemployment, or illness benefits;
  • Crime victim’s compensation;
  • Settlement for a wrongful death lawsuit and life insurance payments for a person you depended upon;
  • Personal injury recovery up to $25,150 except for pain and suffering and/or for monetary loss;
  • Lost earnings payments;
  • Unmatured life insurance policy except for credit insurance; and
  • Life insurance policy with loan value up to $13,400.

Other non-bankruptcy exemptions mostly apply to government and military personnel benefits, with others for workers in regulated labor markets such as railroad workers, merchant sailors, and longshoremen.