Asset Protection in Texas (Plain-English Overview)

I’m Harvey L. Cox, a Texas estate planning attorney based in Waco. This page explains asset protection in plain English—what it means, what it doesn’t mean, and the practical building blocks Texas families use to reduce lawsuit and creditor risk.

This is general educational information for Texas families—not legal advice.

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Quick answer: What is “asset protection”?

Asset protection is the process of reducing the risk that a lawsuit, creditor claim, or financial shock can take what you’ve built.

In real life, good asset protection is usually not one trick or one document. It’s a coordinated system.

What asset protection is (and isn’t)

Asset protection is:

• Reducing exposure before there’s a problem
• Using legal and financial tools in a coordinated way
• Matching the plan to the real-world risk (rental property, business activity, driving exposure, etc.)

Asset protection is not:

• Hiding assets
• A guarantee that you can’t be sued
• A last-minute fix after a claim already exists

The 4 building blocks I usually think about (high level)

1) Reduce risk first (the boring stuff that works)

For many families, the first layer is practical:

• Appropriate insurance coverage
• Safer business practices and contracts
• Avoiding informal “handshake” arrangements that create liability

2) Separate assets from liability

If an activity creates risk, you generally don’t want all assets sitting in the same bucket.

Examples (high level):

• Rental properties may be separated from personal assets
• Business operations may be separated from passive holdings

3) Coordinate ownership and beneficiary designations

Even a well-drafted plan can fail if titles and beneficiaries don’t match the strategy.

This includes:

• How real estate is titled
• How bank/brokerage accounts are owned
• Beneficiary designations on retirement accounts and life insurance

4) Estate planning that supports protection

A working estate plan can reduce chaos during incapacity and death—two times when families are most vulnerable to mistakes and pressure.

Common asset protection mistakes I see

Mistake 1: Thinking a trust automatically protects everything

Some trusts help with management and probate reduction, but asset protection depends on facts, structure, and implementation.

Mistake 2: Using an LLC when the real problem is insurance or behavior

Sometimes the best first move is better insurance and risk reduction—not more entities.

Mistake 3: Putting multiple high-risk assets in one bucket

For example, grouping multiple rental properties together can concentrate risk.

Mistake 4: Ignoring the “small” assets that create big problems

Mineral interests, side businesses, and informal arrangements can create exposure if they’re not addressed.

Mistake 5: Waiting until after a claim exists

Once there’s a known claim or lawsuit risk, options narrow and timing matters.

Questions to ask (to avoid wasted meetings)

If asset protection is a concern, here are practical questions to ask:

1. What are my real risk sources (rentals, business, driving exposure, professional liability)?
2. What insurance do I have—and what does it actually cover?
3. Which assets are most exposed today?
4. How are my properties and accounts titled right now?
5. What would happen if I became incapacitated or died during a dispute?

Next step

If you want a simple starting point, download my free Avoid Probate in Texas Starter Kit.

If you want to talk it through, you can also schedule a consultation (limited availability).

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Disclaimer

This website provides general educational information about estate planning and related topics for Texas families. It is not legal advice and does not create an attorney-client relationship. Legal outcomes depend on your specific facts and circumstances.