# Asset Protection Law in California: Rules and Rulings by Strategy

> California, Ninth Circuit, Supreme Court, and IRS rules on LLCs, trusts, homestead, retirement accounts, voidable transfers, and tax liens, each linked to its source and checked weekly.

Source: https://ridleylawoffices.com/law-watch/asset-protection-rulings/

By Eric Ridley, attorney, Ridley Law. Updated November 2026.

[Law Watch](https://ridleylawoffices.com/law-watch/) · Last verified November 4, 2026 · Changed September 27, 2026: [Homestead exemption amounts set for 2026 and indexed going forward](https://ridleylawoffices.com/law-watch/law-updates/#2026-09-27-ab-2782) · [All changes](https://ridleylawoffices.com/law-watch/law-updates/)

This page collects the statutes and court decisions that decide whether an asset protection strategy works for someone who lives in California: California law, the Ninth Circuit (the federal appeals court for California), the U.S. Supreme Court, and the IRS rules that apply on top of state law. It’s organized by strategy. Each entry links to the statute or the opinion itself, and the page is checked weekly as part of [Law Watch](https://ridleylawoffices.com/law-watch/). For what this means in practice, start with [asset protection in California: what works and what is a myth](https://ridleylawoffices.com/asset-protection-california/).

Two rules run through everything below. Timing controls: a transfer made after a claim exists, or to hinder a known creditor, can be undone under the Uniform Voidable Transactions Act. And a California court applies California law to a California resident’s assets in most of the situations people hope another state’s law will cover.

## LLCs and charging orders

A creditor of an LLC member can get a charging order, which is a lien on the member’s distributions. California also lets the court appoint a receiver and, if distributions won’t pay the judgment within a reasonable time, foreclose and sell the member’s interest. The charging order is the exclusive remedy against the member’s transferable interest, but California courts have held that this does not stop a creditor from reaching the LLC’s own assets through reverse veil piercing. More on the [limits of charging order protection](https://ridleylawoffices.com/charging-order-protection/).

| Authority | What it says or holds |
| --- | --- |
| [Corp. Code, § 17705.03](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CORP&sectionNum=17705.03) | A charging order is a lien on the member’s transferable interest (subd. (a)). The court may appoint a receiver (subd. (b)(1)) and, “upon a showing that distributions under a charging order will not pay the judgment debt within a reasonable time, foreclose the lien and order the sale of the transferable interest” (subd. (b)(3)). The section is “the exclusive remedy” for satisfying a judgment “from the judgment debtor’s transferable interest” (subd. (f)). |
| [Corp. Code, § 16504](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CORP&sectionNum=16504) | The partnership version. A court “may order a foreclosure of the interest subject to the charging order at any time.” |
| [*Curci Investments, LLC v. Baldwin* (2017) 14 Cal.App.5th 214](https://www.courtlistener.com/opinion/6238964/curci-invs-llc-v-baldwin/) | “Reverse veil piercing is a means of reaching the LLC’s assets, not the debtor’s transferable interest in the LLC,” so section 17705.03 does not bar it. The court held reverse piercing may be available against a Delaware LLC owned 99/1 by the debtor and his wife, and remanded without deciding whether to pierce. |
| [*Blizzard Energy, Inc. v. Schaefers* (2021) 71 Cal.App.5th 832](https://www.courtlistener.com/opinion/5298617/blizzard-energy-inc-v-schaefers/) | Followed *Curci*: a charging order is not the creditor’s exclusive remedy. Because the debtor’s wife owned half the LLC and may have been an innocent spouse, the court sent the case back to weigh the equities before adding the LLC as a judgment debtor. |
| Single-member LLCs | Section 17705.03 draws no distinction for single-member LLCs, and no published California decision found addresses one. The closest cases, *Curci* (99/1) and *Blizzard* (50/50), both allowed reverse piercing to proceed. |

## Out-of-state LLCs (Nevada, Wyoming, Delaware)

Forming an LLC in another state changes which state’s law governs the LLC’s internal affairs. It doesn’t move a California resident’s assets out of California’s reach, and an LLC doing business in California still owes California’s annual LLC tax. No published California decision found applies another state’s charging-order statute to protect a member. More on [anonymous Wyoming and Nevada LLCs](https://ridleylawoffices.com/anonymous-llc/) and [holding company LLCs](https://ridleylawoffices.com/holding-company-llc-california/).

| Authority | What it says or holds |
| --- | --- |
| [Corp. Code, § 17708.01](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CORP&sectionNum=17708.01) | The law of the state of formation governs “the organization of the limited liability company, its internal affairs, and the authority of its members and managers” and members’ liability for the LLC’s debts. It says nothing about a member’s own creditors. |
| [Corp. Code, § 17708.07](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CORP&sectionNum=17708.07) | A foreign LLC transacting intrastate business in California without registering may not maintain an action in a California court, though it may defend one. |
| [Rev. & Tax. Code, §§ 17941](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=RTC&sectionNum=17941), [23101](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=RTC&sectionNum=23101) | An LLC doing business in California, or registered there, owes the annual LLC tax, generally $800. The version effective July 13, 2026 adds a $400 first-year tax for certain LLCs for taxable years beginning in 2027 through 2029 (§ 17941, subd. (g)(2)). Section 23101 defines doing business, including bright-line sales, property, and payroll tests. |
| [*Swart Enterprises, Inc. v. Franchise Tax Bd.* (2017) 7 Cal.App.5th 497](https://www.courtlistener.com/opinion/4338268/swart-enterprises-inc-v-franchise-tax-board/) | An out-of-state corporation that passively held a 0.2 percent interest in a manager-managed California LLC, with no right of control, was not doing business in California. The case applied the pre-2011 definition and doesn’t help an owner who controls the LLC. |

## Alter ego and reverse piercing

Federal courts in California apply California alter ego law, and both California and federal courts will treat an entity or a trust as the debtor’s own property when the debtor in fact controls and owns it.

| Authority | What it says or holds |
| --- | --- |
| [Corp. Code, § 17703.04, subd. (b)](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CORP&sectionNum=17703.04) | An LLC member “shall be subject to liability under the common law governing alter ego liability.” Failing to hold meetings isn’t a factor unless the operating agreement requires them. |
| [*In re Schwarzkopf*, 626 F.3d 1032 (9th Cir. 2010)](https://www.courtlistener.com/opinion/179769/in-re-schwarzkopf/) | “In determining whether alter ego liability applies, we apply the law of the forum state.” Applying California law, the court held a trust was the debtor’s alter ego, so its assets belonged to the bankruptcy estate. |
| [*Postal Instant Press, Inc. v. Kaswa Corp.* (2008) 162 Cal.App.4th 1510](https://www.courtlistener.com/opinion/2291272/postal-instant-press-inc-v-kaswa-corp/) | Refused to let an outside creditor reach a corporation’s assets for a shareholder’s personal debt. Later courts confine it: *Curci* held it “was expressly limited to corporations,” and *Reliant Life Shares, LLC v. Cooper* (2023) 90 Cal.App.5th 14 held that “neither the holding nor the reasoning of Postal Instant Press governs” where the entities are closely held and controlled by the wrongdoer. |

## Self-settled trusts and domestic asset protection trusts

California does not protect a trust you create for your own benefit from your own creditors. The trust stays valid, but the spendthrift clause doesn’t bind your creditors, who can reach whatever the trustee could pay you. In bankruptcy, a transfer into a self-settled trust made within ten years of filing can be undone if it was made to hinder, delay, or defraud creditors. Courts in the Ninth Circuit have refused to honor another state’s more favorable trust law for a settlor who lives elsewhere. More on [self-settled trusts in California](https://ridleylawoffices.com/self-settled-trust-california/).

| Authority | What it says or holds |
| --- | --- |
| [Prob. Code, § 15304](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=PROB&sectionNum=15304) | If the settlor is a beneficiary, a restraint on transfer of the settlor’s interest “is invalid against transferees or creditors of the settlor,” though the trust itself stays valid (subd. (a)). Creditors can reach the most the trustee could pay the settlor, up to the settlor’s proportionate contribution (subd. (b)). |
| [*Nelson v. California Trust Co.* (1949) 33 Cal.2d 501](https://www.courtlistener.com/opinion/1371660/nelson-v-california-trust-co/) | The California Supreme Court’s rule: when the settlor makes himself a beneficiary, restraints on reaching his interest are invalid against his creditors. |
| [11 U.S.C. § 548(e)(1)](https://www.govinfo.gov/link/uscode/11/548?link-type=html) | A bankruptcy trustee may avoid a transfer to a self-settled trust or similar device made “on or within 10 years before” the bankruptcy filing, if the debtor is a beneficiary and made the transfer with actual intent to hinder, delay, or defraud creditors. |
| [*In re Cutter*, 398 B.R. 6 (B.A.P. 9th Cir. 2008)](https://www.courtlistener.com/opinion/1839533/cutter-v-seror-in-re-cutter/) | A debtor who, as trustee, could use the trust’s assets for his own benefit was in effect the beneficiary of a self-settled spendthrift trust, so the property “could be reached by the debtor’s creditors under California law.” |
| [*In re Moses*, 167 F.3d 470 (9th Cir. 1999)](https://www.courtlistener.com/opinion/761571/ehrenberg-v-southern-california-permanente-medical-group/) | Describing California law: it denies self-settled trusts protection so people can’t place property beyond their creditors’ reach “while at the same time still reaping the bounties of such property.” |
| [*United States v. Huckaby*, No. 2:23-cv-00587 (E.D. Cal. Mar. 3, 2026)](https://www.courtlistener.com/opinion/10908441/united-states-v-huckaby/) | A federal trial court let the IRS reach a debtor’s half interest in a trust the debtors created for themselves, and found nothing in section 15304 limiting it to property put in trust after the lien arose. A trial court order, not binding precedent. |
| [*In re Huber*, 493 B.R. 798 (Bankr. W.D. Wash. 2013)](https://www.courtlistener.com/opinion/8523523/waldron-v-huber-in-re-huber/) | A bankruptcy court in Washington disregarded a Washington settlor’s choice of Alaska law for his self-settled trust, applied Washington law, and also avoided the transfers under section 548(e). A trial-level bankruptcy decision, not binding in California, but the leading example of a domestic asset protection trust failing in the Ninth Circuit. |
| [*In re Zukerkorn*, 484 B.R. 182 (B.A.P. 9th Cir. 2012)](https://www.courtlistener.com/opinion/818066/in-re-herbert-m-zukerkorn-jennifer-zukerkorn/) | The contrast case: a trust created by the debtor’s mother under Hawaii law kept its protection, because the debtor didn’t create it, so “the public policy behind self-settled trusts in California is not applicable here.” |

## Offshore asset protection trusts

An offshore trust can put assets beyond a U.S. court’s direct reach, but not the settlor. A court can order the settlor to bring the assets back and hold the settlor in contempt for not doing so. Foreign trusts also carry heavy federal reporting duties and penalties. More on [offshore and domestic asset protection trusts](https://ridleylawoffices.com/offshore-asset-protection-trust-california/).

| Authority | What it says or holds |
| --- | --- |
| [*FTC v. Affordable Media, LLC*, 179 F.3d 1228 (9th Cir. 1999)](https://www.courtlistener.com/opinion/7077728/federal-trade-commission-v-affordable-media-llc/) | Affirmed civil contempt against settlors of a Cook Islands trust who said they couldn’t bring the money back. “In the asset protection trust context, moreover, the burden on the party asserting an impossibility defense will be particularly high.” |
| [26 U.S.C. § 6048](https://www.govinfo.gov/link/uscode/26/6048?link-type=html) and [§ 6677](https://www.govinfo.gov/link/uscode/26/6677?link-type=html); IRS Forms 3520 and 3520-A | A U.S. person must report creating a foreign trust, transfers to it, and distributions from it. The penalty for not reporting is the greater of $10,000 or 35 percent of the amount involved (5 percent for the owner’s annual trust return), and a foreign country’s secrecy penalties are not reasonable cause. |
| [26 U.S.C. § 679](https://www.govinfo.gov/link/uscode/26/679?link-type=html) | A U.S. person who transfers property to a foreign trust with a U.S. beneficiary is taxed as the owner of that part of the trust. |
| [*Bittner v. United States*, 598 U.S. 85 (2023)](https://www.courtlistener.com/opinion/9380169/bittner-v-united-states/) | The $10,000 penalty for a non-willful failure to file a foreign bank account report (FBAR, 31 U.S.C. § 5314) applies per report, not per account. |

## Spendthrift trusts created by someone else

A trust someone else creates for you, with a spendthrift clause, is the strongest protection California law gives. It still has exceptions: support for a child or spouse, criminal restitution, payments already due, and a 25 percent reach into future payments for general creditors. More on [spendthrift trusts and creditor protection](https://ridleylawoffices.com/spendthrift-trust-creditor-protection-california/).

| Authority | What it says or holds |
| --- | --- |
| [Prob. Code, §§ 15300](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=PROB&sectionNum=15300), [15301](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=PROB&sectionNum=15301) | A spendthrift restraint protects income and principal until paid, but once principal is due and payable, a court may order the trustee to pay a money judgment out of it (§ 15301, subd. (b)). |
| [Prob. Code, §§ 15305](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=PROB&sectionNum=15305), [15305.5](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=PROB&sectionNum=15305.5) | Support judgments for a spouse, former spouse, or minor child, and felony restitution judgments, can reach trust payments “notwithstanding any provision in the trust instrument.” |
| [Prob. Code, § 15306.5](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=PROB&sectionNum=15306.5) | A general judgment creditor can be paid from future payments to the beneficiary, but not more than 25 percent of each payment, and not what the beneficiary needs for support. |
| [*Ammco Ornamental Iron, Inc. v. Wing* (1994) 26 Cal.App.4th 409](https://www.courtlistener.com/opinion/2243646/ammco-ornamental-iron-inc-v-wing/) | An order under section 15306.5 must be limited to 25 percent of each payment and must respect the support limit. |
| [*Carmack v. Reynolds* (2017) 2 Cal.5th 844](https://www.courtlistener.com/opinion/4377790/carmack-v-reynolds/) | A bankruptcy trustee can reach the full amount of trust principal distributions currently due and payable, unless the trust says they are for support or education and the beneficiary needs them, and separately up to 25 percent of anticipated payments, reduced for support needs. |
| [*Chatard v. Oveross* (2009) 179 Cal.App.4th 1098](https://www.courtlistener.com/opinion/2256408/chatard-v-oveross/) | A trustee who is also a beneficiary and breaches the trust can have his own interest reached to repay the trust, “notwithstanding the existence of the spendthrift provision.” |
| [*Ventura County Dept. of Child Support Services v. Brown* (2004) 117 Cal.App.4th 144](https://www.courtlistener.com/opinion/2252018/ventura-county-dept-of-child-support-services-v-brown/) | A court may compel a discretionary trustee to pay an enforceable child support judgment the trustee refuses to satisfy. Later cases have read this narrowly. |
| [11 U.S.C. § 541(c)(2)](https://www.govinfo.gov/link/uscode/11/541?link-type=html) | In bankruptcy, a restriction on transfer of a trust interest that is enforceable under state law keeps that interest out of the bankruptcy estate. |

## The homestead exemption

California protects equity in a home the debtor or family lives in, up to an amount tied to the county’s median home price within a floor and a ceiling that adjust each year. More on [the California homestead exemption](https://ridleylawoffices.com/california-homestead-exemption/).

| Authority | What it says or holds |
| --- | --- |
| [Code Civ. Proc., § 704.730](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CCP&sectionNum=704.730) | The exemption is the greater of the county median sale price for a single-family home, up to a ceiling, or a floor amount, adjusted annually for inflation. The Legislative Counsel’s Digest for [AB 2782](https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202520260AB2782) (Stats. 2026, ch. 640) states the 2026 floor as $373,175 and the ceiling as $746,350. |
| [Code Civ. Proc., §§ 704.920](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CCP&sectionNum=704.920), [704.930](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CCP&sectionNum=704.930) | A homestead can also be declared by recording a homestead declaration, signed and acknowledged like a deed. |
| [*Barclay v. Boskoski*, 52 F.4th 1172 (9th Cir. 2022)](https://cdn.ca9.uscourts.gov/datastore/opinions/2022/11/14/22-55098.pdf) | In deciding whether a judgment lien impairs the California homestead exemption in bankruptcy, courts use the exemption the debtor would have on the filing date, so the larger post-2021 exemption applied to an older lien. This rule is for lien avoidance in bankruptcy; outside bankruptcy, Code of Civil Procedure section 703.050 uses the exemption in effect when the lien attached. |
| [*In re Melendez Rey*, 657 B.R. 634 (B.A.P. 9th Cir. 2024)](https://cdn.ca9.uscourts.gov/datastore/bap/2024/03/29/23-1120.pdf) | A residence and a separate rental structure on the same parcel are not treated as one unit for the California homestead exemption. |

## Retirement accounts

Employer retirement plans are generally fully protected. IRAs get more limited protection under California law, though a 2025 change sets a large minimum for ordinary personal debts, and inherited IRAs lose the federal bankruptcy protection for retirement funds. More on [inherited IRAs](https://ridleylawoffices.com/guides/inherited-ira/).

| Authority | What it says or holds |
| --- | --- |
| [Code Civ. Proc., § 704.115](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CCP&sectionNum=704.115) | Private retirement plans are exempt. IRAs and self-employed plans are exempt “only to the extent necessary to provide for the support of the judgment debtor when the judgment debtor retires” and of the debtor’s spouse and dependents. Since January 1, 2025 (AB 2837), for personal debts that amount can’t be set below the federal bankruptcy IRA cap, currently $1,711,975. |
| [*In re Lieberman*, 245 F.3d 1090 (9th Cir. 2001)](https://www.courtlistener.com/opinion/772768/in-the-matter-of-fred-lieberman-deceased-and-florance-lieberman/) | A “private retirement plan” fully exempt under section 704.115(a)(1) is one created by a private employer or employee organization, “as opposed to an arrangement by an individual.” |
| [*Patterson v. Shumate*, 504 U.S. 753 (1992)](https://www.courtlistener.com/opinion/112754/patterson-v-shumate/) | An ERISA plan’s anti-alienation clause “constitutes an enforceable transfer restriction,” so the plan stays out of the bankruptcy estate. |
| [*Rousey v. Jacoway*, 544 U.S. 320 (2005)](https://www.courtlistener.com/opinion/142887/rousey-v-jacoway/) | IRAs can be exempted in bankruptcy under the federal retirement-account exemption. |
| [*Clark v. Rameker*, 573 U.S. 122 (2014)](https://www.courtlistener.com/opinion/2678134/clark-v-rameker/) | An inherited IRA is not “retirement funds” under the federal bankruptcy exemption, so it isn’t protected that way. |
| [11 U.S.C. § 522(n)](https://www.govinfo.gov/link/uscode/11/522?link-type=html) | Caps the bankruptcy exemption for traditional and Roth IRAs, adjusted to $1,711,975 for cases filed on or after April 1, 2025. Rollovers from employer plans don’t count against the cap. |

## Life insurance and annuities

| Authority | What it says or holds |
| --- | --- |
| [Code Civ. Proc., § 704.100](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CCP&sectionNum=704.100) | Unmatured life insurance is exempt except for its loan value, which is exempt up to $17,525 for amounts effective April 1, 2025 ([Judicial Council form EJ-156](https://courts.ca.gov/sites/default/files/courts/default/2024-11/ej156.pdf)). Matured benefits are exempt to the extent reasonably necessary for support. |
| [*In re Simpson*, 557 F.3d 1010 (9th Cir. 2009)](https://www.courtlistener.com/opinion/1433880/simson-v-burkart-in-re-simpson/) | “A single-premium annuity does not qualify categorically as life insurance” under section 704.100(a), and the annuity there was not an exempt private retirement plan either. |
| [*Bagby v. Davis* (Feb. 17, 2026, B333649)](https://www.courts.ca.gov/opinions/documents/B333649.PDF) | “A surrendered life insurance policy is not necessarily exempt from collection.” The court treated a voluntarily surrendered policy as matured. |

## Voidable transfers

Most asset protection fails here. A transfer made with intent to hinder, delay, or defraud a creditor can be undone, and so can a transfer for less than fair value while insolvent. More on [what you can still protect after you’re sued](https://ridleylawoffices.com/already-sued-california-asset-protection/).

| Authority | What it says or holds |
| --- | --- |
| [Civ. Code, §§ 3439.04](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=3439.04), [3439.05](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=3439.05) | A transfer is voidable if made “with actual intent to hinder, delay, or defraud any creditor,” whether the claim arose before or after the transfer, judged by factors such as a transfer to an insider or the debtor keeping control. A transfer without reasonably equivalent value while insolvent is voidable by existing creditors. |
| [Civ. Code, § 3439.09](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=3439.09) | Generally four years from the transfer (or one year from discovery for actual intent), and every claim “is extinguished if no action is brought or levy made within seven years after the transfer was made.” |
| [*MACH-1 RSMH, LLC v. Darras* (2024) 103 Cal.App.5th 1288](https://www.courtlistener.com/opinion/10031656/mach-1-rsmh-llc-v-darras/) | The seven-year limit applies “to any voidable transfer action asserting the elements of a UVTA claim, even if characterized as a common law action.” |
| [*Mejia v. Reed* (2003) 31 Cal.4th 657](https://www.courtlistener.com/opinion/2625291/mejia-v-reed/) | The fraudulent transfer statute applies to property divided in a marital settlement agreement. |
| [*Filip v. Bucurenciu* (2005) 129 Cal.App.4th 825](https://www.courtlistener.com/opinion/2255494/filip-v-bucurenciu/) | “There is no minimum number of factors that must be present” to find actual intent to defraud. |
| [11 U.S.C. §§ 544(b), 548(a)](https://www.govinfo.gov/link/uscode/11/548?link-type=html) | A bankruptcy trustee can use state voidable transfer law, and can also avoid transfers made within two years before filing. |
| [*Husky International Electronics, Inc. v. Ritz*, 578 U.S. 355 (2016)](https://www.courtlistener.com/opinion/3203765/husky-international-electronics-inc-v-ritz/) | A debt can’t be discharged in bankruptcy if it arose from a fraudulent conveyance scheme, even without a false statement. |
| [*Conservatorship of McQueen* (2014) 59 Cal.4th 602](https://www.courtlistener.com/opinion/2682037/conservatorship-of-mcqueen/) | Code of Civil Procedure section 685.040, the route for adding enforcement fees to a judgment, “is not itself a substantive fee-shifting statute.” Fees must rest on an underlying contract or statute. |

## Community property and a spouse’s debts

| Authority | What it says or holds |
| --- | --- |
| [Fam. Code, §§ 910](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=FAM&sectionNum=910), [913](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=FAM&sectionNum=913) | The community estate “is liable for a debt incurred by either spouse before or during marriage.” One spouse’s separate property is generally not liable for the other spouse’s debts. |
| [*Bijan Boutiques, LLC v. Isong* (2024) 104 Cal.App.5th 132](https://www.courts.ca.gov/opinions/archive/G063288.PDF) | Under Family Code section 916, property a spouse receives in a divorce division “is not liable for a debt incurred by the person’s spouse” unless the debt was assigned to that spouse, and a creditor could not use voidable transfer law to undo the court’s division. |

## IRS collection

A federal tax lien reaches more than a state-court creditor can. State law decides what the taxpayer owns, but federal law decides whether the lien attaches, and the IRS can treat assets held by an alter ego or a nominee as the taxpayer’s own.

| Authority | What it says or holds |
| --- | --- |
| [26 U.S.C. § 6321](https://www.govinfo.gov/link/uscode/26/6321?link-type=html) | The lien attaches to “all property and rights to property, whether real or personal, belonging to such person.” |
| [26 U.S.C. § 6334](https://www.govinfo.gov/link/uscode/26/6334?link-type=html); [Rev. Proc. 2025-32](https://www.irs.gov/pub/irs-drop/rp-25-32.pdf) | Only narrow federal levy exemptions apply. For 2026, household goods and personal effects are exempt up to $11,980 and books and tools of a trade up to $5,990. |
| [*Drye v. United States*, 528 U.S. 49 (1999)](https://www.courtlistener.com/opinion/118322/drye-v-united-states/) | Disclaiming an inheritance under state law did not defeat federal tax liens. |
| [*United States v. Craft*, 535 U.S. 274 (2002)](https://www.courtlistener.com/opinion/118497/united-states-v-craft/) | A spouse’s interest in property held as tenants by the entirety is property the federal tax lien attaches to. |
| [*United States v. Rodgers*, 461 U.S. 677 (1983)](https://www.courtlistener.com/opinion/110942/united-states-v-rodgers/) | A court can order a home sold to satisfy a federal tax lien even though a non-liable spouse has a homestead interest, subject to equitable discretion. |
| [*G.M. Leasing Corp. v. United States*, 429 U.S. 338 (1977)](https://www.courtlistener.com/opinion/109579/g-m-leasing-corp-v-united-states/) | If an entity is the taxpayer’s alter ego, the IRS “could properly regard” its assets as the taxpayer’s property subject to the lien. |
| [*Fourth Investment LP v. United States*, 720 F.3d 1058 (9th Cir. 2013)](https://www.courtlistener.com/opinion/902301/fourth-investment-lp-v-united-states/) | “California law recognizes a nominee theory of property ownership,” so the IRS could enforce liens against property held in another’s name. |
| [*Towe Antique Ford Foundation v. IRS*, 999 F.2d 1387 (9th Cir. 1993)](https://www.courtlistener.com/opinion/612197/towe-antique-ford-foundation-v-internal-revenue-service/) | Upheld an IRS levy on a nonprofit corporation’s assets as the taxpayer’s alter ego, applying the law of the forum state. |
| [*Commissioner v. Stern*, 357 U.S. 39 (1958)](https://www.courtlistener.com/opinion/105711/commissioner-v-stern/) | Whether someone who received the taxpayer’s property is liable as a transferee (26 U.S.C. § 6901) is decided by state law. |

## Recent rulings

Decisions since January 2024 that touch these rules, newest first. New rulings are added when the weekly check finds them.

| Decision | What changed |
| --- | --- |
| *United States v. Huckaby* (E.D. Cal. Mar. 3, 2026) | IRS reached a debtor’s interest in a self-settled trust under section 15304 (see self-settled trusts above). |
| *Bagby v. Davis* (Feb. 17, 2026, B333649) | A surrendered life insurance policy is not necessarily exempt (see life insurance above). |
| *MACH-1 RSMH, LLC v. Darras* (2024) | The seven-year voidable transfer limit applies even to claims pleaded as common law (see voidable transfers above). |
| *Bijan Boutiques, LLC v. Isong* (2024) | A creditor can’t reach property a spouse received in a divorce division for the other spouse’s debt (see community property above). |
| *In re Melendez Rey* (B.A.P. 9th Cir. Mar. 29, 2024) | A separate rental structure on the homestead parcel isn’t part of the homestead (see homestead above). |

## How this page is checked

Every statute entry links to the current text, and every case entry links to the opinion. Each case listed was read for its holding and checked for later treatment before it was added, and decisions from trial courts or other states are labeled as such. The page is checked weekly for statute amendments and new published decisions from the California courts, the Ninth Circuit, and the U.S. Supreme Court. To report an error, email [eric@ridleylawoffices.com](mailto:eric@ridleylawoffices.com).

*This page is for general information only, not legal advice. Whether a strategy protects a particular person depends on the facts, especially timing. Consult an attorney about your specific situation.*