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State Personal
Property
Exemption Laws for Stock
All of the jurisdictions in this country exempt
certain property from the reach of creditors. The most obvious
example of this are state homestead laws. Each state exempts different
types of property, in varying amounts, from execution by creditors.
An example of this is Nevada Revised Statutes (NRS) 21.090, which
is entitled "[p]roperty exempt from execution." Under
this statute, one can keep "private libraries" up to
the value of $1,500, NRS 21.090(1)(a), "necessary household
goods" up to $3,000 in value, NRS 21.090(1)(b), a motor vehicle,
if the debtor's equity in it is less than $4,500, NRS 21.090(1)(f),
and other such property from being executed upon by a creditor.
But what of stock that a debtor holds in publicly
traded companies? What happens if you get sued personally and
your insurance doesn’t cover it? Will creditors be able to
attach to your stocks in the stock market or how about the stock
of your own corporation? The answer is yes! Only a minimal amount
is protected at the state level, and in most states, none is protected.
More specifically, of all the jurisdictions in
this country, only Pennsylvania and South Carolina specifically
mention "stock" or "securities" in their exemption
laws. However, stock is personal property, and the laws of many
states allow debtors to keep certain amounts of personal property
from the reach of creditors.
The following chart shows the value of stock that
a debtor can keep from a creditor in each jurisdiction in this
country. If the word "none" appears, a creditor in that
state generally can execute against any stock held by a debtor.
|
State
|
Amount of Stock Exemption
|
| Alabama |
$3,000 |
| Alaska |
None |
| Arizona |
None |
| Arkansas |
$500 (married) $200
(single) |
| California |
None |
| Colorado |
None |
| Connecticut |
None |
| Delaware |
$5,000 |
| District of Columbia |
None |
| Florida |
None |
| Georgia |
None |
| Hawaii |
None |
| Idaho |
None |
| Illinois |
$2,000 |
| Indiana |
$4,000 |
| Iowa |
None |
| Kansas |
None |
| Kentucky |
$1,000 |
| Louisiana |
None |
| Maine |
$400 |
| Maryland |
$3,000 |
| Massachusetts |
None |
| Michigan |
None |
| Minnesota |
None |
| Mississippi |
None |
| Missouri |
$400 (anyone) $1,250
(head of household, plus $250 for each dependent child) |
| Montana |
None |
| Nebraska |
None |
| Nevada |
None |
| New Hampshire |
None |
| New Jersey |
$1,000 |
| New Mexico |
$500 or $2,500 (if
the homestead exemption is not used) |
| New York |
None |
| North Carolina |
$3,500 (less any
amount utilized for homestead) |
| North Dakota |
$5,000 (head of
household) or $7,500 (anyone who does not use homestead exemptions) |
| Ohio |
$400 |
| Oklahoma |
None |
| Oregon |
None |
| Pennsylvania |
$300 |
| Puerto Rico |
None |
| Rhode Island |
None |
| South Carolina |
$1,000 (if the homestead
exemption is not used) |
| South Dakota |
$6,000 (head of
household) $4,000 (anyone) |
| Tennessee |
$4,000 |
| Texas |
None |
| Utah |
None |
| Vermont |
$400 (up to $7,000
more for the unused portion of other exemptions) |
| Virgin Islands |
None |
| Virginia |
$5,000 (plus $500
for each dependent) |
| Washington |
None |
| West Virginia |
$1,000 (head of
household) $800 anyone (plus the unused portion of the homestead
exemption, which is $15,000) |
| Wisconsin |
None |
| Wyoming |
None |
In conclusion, personal property, including investments
in the stock market and stock of your own company, are only protected
minimally at best by each state. You must look for alternatives
to protect your investments. One of the primary vehicles is the
Limited Liability Company when it is taxed as a partnership!
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